RICHMOND, Va. — Discount retailer Dollar Tree Inc.'s net income increased nearly 22 percent in the second quarter on higher sales as consumers frequented its stores, and the company raised its sales and profit forecast for the rest of the year.
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The Chesapeake, Va.-based company said Thursday that it earned $94.9 million, or 77 cents per share, for the period ended July 30. That's up from $78 million, or 61 cents per share, a year ago.
Dollar Tree said its net sales increased about 12 percent to $1.54 billion as more shoppers visited the discount retailer and bought more items on each trip. It also was helped by higher margins.
Analysts polled by FactSet on average expected earnings of 75 cents per share on revenue of $1.55 billion. Its shares fell $2.24, or about 3.4 percent, to $64.23 in early trading Thursday.
Sales at stores open at least one year increased 4.7 percent. That's a key indicator of a retailer's health because it excludes the effects of new stores and closings.
"Customers continue to respond enthusiastically to our assortment of low-priced and high-value basics," CEO Bob Sasser said in a conference call with investors. "We're gaining new customers every quarter, and when customers shop our stores, they like our compelling variety of discretionary products."
Top-selling items included food, party supplies, toys, health and beauty care, and products for the home.
Dollar stores, which benefited from shoppers trying to stretch their dollars in the recession, have expanded rapidly and seen sales continue to grow. They're also taking business away from retail giants like Wal-Mart and Target.
"Over the next few years, it appears likely that consumers' demand for value will continue to grow and intensify," Sasser said.
Dollar Tree operates more than 4,240 stores in the U.S. and Canada. It opened 76 stores, closed 11, and expanded or moved 23 during the quarter.
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The company expects third-quarter net income between 77 cents and 83 cents per share, on revenue between $1.56 billion and $1.60 billion on low single-digit growth in revenue at stores open at least a year. Analysts on average had been expecting a third-quarter profit of 82 cents per share on $1.59 billion in revenue.
For the full year, the company expects profit between $3.82 and $3.95 per share, up from a previous forecast between $3.69 and $3.85 per share. It expects revenue between $6.53 billion and $6.62 billion.
Analysts had been expecting an annual profit of $3.90 per share on $6.6 billion in revenue.
