Dollar Tree Posts Downbeat Q1 Earnings, Issues Weak Q2 Forecast

Shares of

dipped over 4 percent in pre-market trading after the company reported weaker-than-expected earnings for the first quarter and issued a downbeat forecast for the second quarter. The Chesapeake, Virginia-based company posted quarterly net earnings of $69.5 million, or $0.34 per share, compared to $138.3 million, or $0.67 per share, in the year-ago period. Excluding non-recurring items, the company's adjusted earnings came in at $0.71 per share. Its sales surged 8.8 percent year-over-year to $2.18 billion from $2 billion. However, analysts were expecting a profit of $0.75 per share on revenue of $2.2 billion. The average estimate among 10 Estimize users was for earnings of $0.75 per share and revenue of $2.2 billion. Its same store sales gained 3.4 percent on a constant currency basis in the quarter, versus a 2.0 percent growth in the year-ago period. Its gross profit rose 7.5 percent to $748.9 million versus $696.6 million. Selling, general and administrative expenses widened to 23.7 percent of sales, from 23.2 percent of sales. During the quarter, the Company opened 93 stores, closed 6 stores and expanded or relocated 10 stores. "Comparable store sales grew as the result of increases in both traffic and average ticket," stated Bob Sasser, Chief Executive Officer. "Customers are shopping with us more often and they are buying more on each visit. Our performance continues to validate that Dollar Tree is part of the solution for millions of customers seeking great values for their hard-earned dollars. Despite challenges presented by delayed receipts of merchandise related to the west coast port congestion and the impact of the holiday calendar shift, our team worked together to deliver solid sales and earnings, both of which were well within our guidance range." For the second quarter, Dollar Tree projects adjusted earnings of $0.63 to $0.68 per share, on sales of $2.17 billion to $2.23 billion. Analysts had expected earnings of $0.70 per share on revenue of $2.23 billion. For full-year 2015, the company now expects net sales of $9.24 billion to $9.42 billion, versus earlier forecast of $9.21 billion to $9.45 billion. It now projects adjusted earnings of $3.32 to $3.47 per share, versus prior outlook of $3.30 to $3.50 per share. Dollar Tree shares fell 4.27 percent to $73.00 in pre-market trading.