Dollar Tree profit up 22% on improved sales

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 Feb. 27, 2013, 9:46 a.m. EST 

 http://www.marketwatch.com/story/dollar-tree-profit-up-22-on-improved-sales-2013-02-27?siteid=bigcharts&dist=bigcharts

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By Tess Stynes

Dollar Tree Inc.'s DLTR +12.85% fiscal fourth-quarter earnings rose 22% as the discount retailer continued to post strong sales growth as shoppers spent more during their visits to its stores.

Shares were up 3.5% at $42.50 in premarket trading. Through Tuesday's close, the stock is down 7.1% in the past 12 months.

For the year, the company projected per-share earnings of $2.54 to $2.74 on revenue of $7.79 billion to $7.97 billion. Analysts polled by Thomson Reuters recently expected $2.81 and $7.9 billion, respectively.

For the current quarter, the company forecast per-share earnings of 53 cents to 58 cents on revenue of $1.84 billion to $1.89 billion. Analysts expected 58 cents and $1.87 billion, respectively.

Dollar Tree's earnings have soared in recent years as a sluggish U.S. economy and high unemployment have helped drive customer traffic. Dollar Tree has increased its private-label and branded offerings, as well as added frozen and refrigerated foods to increase its appeal.

However, the rapid expansion of Dollar Tree and its rivals, as well as stepped up efforts by retail giant Wal-Mart Stores Inc. WMT +0.18% to win back customers lost in the recession, has led some retail experts to question how long the dollar-store sector's strong growth pace can be sustained.

"On top of a very strong fourth-quarter performance in 2011, average basket size increased and customers responded this year in record numbers," President and Chief Executive Bob Sasser said.

For the quarter ended Feb. 2, Dollar Tree reported a profit of $228.6 million, or $1.01 a share, up from $187.9 million, or 80 cents a share, a year earlier. Revenue climbed 15% to $2.25 billion. The latest period included an additional week of sales.

The company in November forecast per-share earnings of 97 cents to $1.02 on revenue of $2.2 billion to $2.26 billion.

Gross margin rose to 37.9% from 37.8%.

Same-store sales were up 2.4%, compared with a 7.3% increase a year earlier.

At the end of the quarter, Dollar Tree had 4,671 stores, up from 4,351 a year earlier.

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