Dollar Tree Shares Sink With Q4 Same-Store Sales Below Estimates

Discount retailer Dollar Tree, the leading discount variety store operator in North America, saw shares discounted after it reported its fourth quarter results. Those numbers fell below expectations, and the company’s same-store sales came in below Wall Street estimates, according to a press release.

Shares were down 10 percent in early trading on Wednesday (Mar. 7) to roughly $94 a share. The headline numbers showed the top line up 13 percent to $6.36 billion, shy of the $6.4 billion Wall Street expected. In addition, adjusted earnings per share (EPS) came in at $1.89, a penny off consensus.

Company-wide same-store sales grew by 2.4 percent as measured in constant currency, 40 basis points lower than Wall Street analysts had sought. Both average order and transaction tallies were also up on the quarter.

Breaking down same-store results a bit, Dollar Tree’s were up 3.8 percent on a constant currency measurement, while same-store sales for Family Dollar were up just 1 percent. Analysts had provided estimates of 4 percent and 1.5 percent growth, respectively, with both brands coming in under expectations.

“I am proud of our team’s performance in the fourth quarter and our results for 2017,” said Gary Philbin, Dollar Tree president and CEO. “For the quarter, we posted positive same-store sales in our Dollar Tree and Family Dollar banners, while improving gross margin and leveraging costs. For the year, we opened 603 new stores, exceeded $22 billion in sales and improved our operating margin by 80 basis points.”

Looking ahead, Dollar Tree said first quarter earnings would be in the range of $1.18 to $1.25, with consensus at $1.32. It projected revenues for the current period that also fell short of analyst estimates, with a range of $5.53 billion to $5.63 billion. Expectations had been held at $5.65 billion.

In the wake of the Dollar Tree report, Investor’s Business Daily noted Wednesday that discounters have had choppy results during the latest earnings season, including roiling stock prices. Apparel retailer Ross Stores saw shares down 5 percent amid cautious guidance. Target shares were slammed Tuesday, on both guidance and lower-than-expected traction during the holiday shopping season.