Dollar Tree Q4 Results Miss Estimates; Sees Q1 In Line With View; Stock Down

(RTTNews) - Dollar Tree Inc. (DLTR) reported a profit for the fourth-quarter that increased 10.8% from last year. But earnings per share decreased by 2.9% to $0.97. Consolidated net sales increased 116.7% from the prior year, due to $2.68 billion sales from the Family Dollar segment and a same-store sales increase of 1.7% on a constant currency basis for the Dollar Tree segment.

Both adjusted earnings per share and revenue for the quarter missed analysts' expectations.

In pre-market trade, DLTR is currently trading at $75.00, down $5.25 or 6.54%.

The Company estimates consolidated net sales for the first quarter of 2016 to range from $5.05 billion to $5.12 billion, based on a low single-digit increase in same-store sales and year-over-year selling square footage growth of 132%. Earnings per share are expected to range from $0.75 to $0.83. Analysts expected the company to report earnings of $0.80 per share and revenues of $5.10 billion for the first-quarter.

For fiscal 2016, the company estimates consolidated net sales to range from $20.76 billion to $21.11 billion. This estimate is based on a low single-digit increase in same-store sales, and 4.0% square footage growth. Fiscal year 2016 earnings per share are expected to range from $3.35 to $3.65. Wall Street currently is looking for fiscal year 2016 earnings of $3.76 per share on annual revenues of $20.92 billion.

Net income for the fourth-quarter increased $22.4 million year-over-year to $229.0 million, while earnings per share decreased by 2.9% to $0.97.

Adjusted net income increased to $239.4 million from $239.0 million last year, but adjusted earnings per share decreased to $1.01 from $1.16. Analysts polled by Thomson Reuters expected the company to report earnings of $1.07 per share for the fourth-quarter. Analysts' estimates typically exclude special items.

Gross profit increased by $734.5 million, or 80.0%, to $1.65 billion in the fourth quarter compared to $918.1 million in the prior year's fourth quarter. The dollar increase was primarily driven by $673.7 million of gross profit for Family Dollar as well as higher sales at Dollar Tree.

As a percent of sales, gross margin decreased to 30.8% compared to 37.1% in the prior year. The primary contributors to the decrease were the impact of the overall lower-margin product mix for the Family Dollar business, $15.9 million for Family Dollar related to the amortization of the stepped up inventory basis, and $11.5 million of planned markdowns associated with rebannering Deals stores.

Consolidated net sales increased 116.7% to $5.37 billion from $2.48 billion in the prior year's fourth quarter. Wall Street expected revenues of $5.41 billion. The increase was the result of $2.68 billion in sales from the Family Dollar segment and a same-store sales increase of 1.7% on a constant currency basis for the Dollar Tree segment. In comparison, same-store sales, on a constant currency basis, increased 5.6% in the prior-year period for the Dollar Tree segment. Adjusted for the impact of Canadian currency fluctuations, the same-store sales increase was 1.3%. The positive same-store sales were driven by increases in customer count and average ticket.