Dollar Tree, Dollar General Q2 Results Miss View; Shares Tumble

(RTTNews) - Discount retailers Dollar Tree Inc. (DLTR) and Dollar General Corp. (DG) both reported results for the second quarter that missed analysts' expectations.

Looking ahead, Dollar Tree also forecast revenue for the third quarter below analysts' estimates and lowered its full-year revenue outlook. Shares of both companies are falling in pre-market activity.

Dollar Tree's second-quarter net income was $170.2 million or $0.72 per share, compared to net loss of $98 million or $0.46 per share in the prior-year quarter.

Excluding acquisition-related adjustments, adjusted net earnings for the year-ago period were $0.25 per share.

On average, 21 analysts polled by Thomson Reuters expected the company to report earnings of $0.73 per share. Analysts' estimates typically exclude special items.

Consolidated net sales grew 65.9 percent to $5.00 billion from $3.01 billion in the same quarter last year, but missed analysts' consensus revenue estimate of $5.09 billion.

The increase in sales was the result of an incremental $1.80 billion in sales from the Family Dollar stores as well as sales from new Dollar Tree stores in addition to a same-store sales increase of 1.2 percent on a constant currency basis. Same-store sales increased 2.7 percent on a constant currency basis in the prior-year period.

For the third quarter, Dollar Tree forecast consolidated net sales between $5.02 billion to $5.10 billion, based on a low single-digit increase in same-store sales. Earnings per share are estimated in a range of $0.76 to $0.82.

The Street expects earnings of $0.76 per share for the quarter on revenues of $5.13 billion.

For fiscal 2016, Dollar Tree now forecasts consolidated net sales between $20.69 billion and $20.87 billion, based on a low single-digit increase in same-store sales. The company now anticipates earnings per share in a range between $3.67 and $3.82.

Earlier, the company forecast full-year consolidated net sales between $20.79 billion and $21.08 billion, and earnings in a range of $3.58 and $3.80 per share.

Analysts expect earnings of $3.79 per share for the year on revenues of $20.97 billion.

Meanwhile, Dollar General's second-quarter profit rose from last year, reflecting higher sales and improved margins. However, results missed analysts' estimates. Looking ahead, the company affirmed its earnings growth guidance for fiscal 2016.

Dollar General's second-quarter net income was $306.52 million or $1.08 per share, up from $282.35 million or $0.95 per share in the prior-year quarter. Analysts expected earnings of $1.09 per share.

Net sales grew 5.8 percent to $5.39 billion from $5.10 billion in the same quarter last year, but missed analysts' consensus estimate of $5.50 billion.

Same-store sales increased 0.7 percent, driven primarily by an increase in average transaction amount offset by a decline in traffic. However, the company noted that the same-store sales growth was below its expectations.

For fiscal 2016, Dollar General continues to forecast earnings per share growth within the previously announced range of 10 percent to 15 percent. The Street expects earnings of $4.64 per share for the year.

The company now projects capital expenditures for fiscal 2016 in a range of $580 million to $630 million to reflect the purchase of 42 Walmart Express stores, compared to the prior forecast of $550 million to $600 million.

Dollar General's board of directors approved an additional $1.0 billion for share repurchases, increasing the total authorization for future repurchases to approximately $1.4 billion. The authorization has no expiration date.

The board also declared its regular quarterly cash dividend of $0.25 per share on the company's common stock.