Dollar Tree same-store sales disappoint, shares fall
FILE PHOTO: A shopping cart is seen inside a Dollar Tree discount store in Garden City, New York, U.S., May 23, 2016. REUTERS/Shannon Stapleton/File Photo
REUTERS: Discount store operator Dollar Tree Inc reported disappointing holiday quarter results hurt by lower-than-expected sales at both Dollar Tree and Family Dollar stores.Shares of the company sank 13 percent in premarket trading and were set to open at their lowest since Nov. 15 on Wednesday.Analysts had expected Dollar Tree to get a nice bump in sales from its core customer base, who earn lower wages and were expected to benefit on pay hikes resulting from the new U.S. tax code.But Family Dollar, the unit Dollar Tree bought in 2015, reported underwhelming holiday-quarter same-store sales growth despite Dollar Tree making several plans to attract customers.While Dollar Tree sells goods at a fixed-price point of US$1 or less, its Family Dollar chain follows a multi price-point strategy, selling goods for US$10 or less.Same-store sales at Family Dollar rose 1 percent, while they rose 3.8 percent at Dollar Tree.
Wall Street analysts had expected same-store sales at Family Dollar to rise 1.46 percent and 3.99 percent at Dollar Tree stores, according to Thomson Reuters I/B/E/S.Overall, sales at established stores rose 2.4 percent, lower than the average analyst estimate of 2.73 percent.Net income rose to US$1.04 billion, or US$4.37 per share, in the fourth quarter ended Feb. 3, from US$321.8 million, or US$1.36 per share, a year earlier.The company said it recorded a tax benefit of US$583.7 million in the latest quarter due to changes in the U.S. tax code.
Excluding items, Dollar Tree earned US$1.89 per share, missing analysts' average estimate by a cent.Net sales rose to US$6.36 billion from US$5.64 billion.The Chesapeake, Virginia-based company also gave a full-year profit and revenue forecast that was in-line with estimates.(Reporting by Nivedita Balu in Bengaluru; Editing by Bernard Orr)
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