By Michael Calia
Dollar Tree Inc. said its fiscal first-quarter profit rose 3.6% as sales grew, the results in line with the company's expectations.
The company said it experienced higher customer traffic and a bigger average ticket, with seasonal merchandise and candy among the leading categories.
Dollar Tree, like other deep discounters, has generally benefited from bargain-hungry consumers strained by a sluggish economic recovery. The company has broadened its offerings to include refrigerated foods while it has started to accept food stamps.
Yet, the company in February offered full-year earnings and sales guidance below analysts' expectations at the time. On Thursday, it tightened its earnings guidance, raising it by three cents on the bottom end of the range to $2.94 a share and lowering the top end by a penny to $3.12 a share. The company also narrowed its revenue outlook range to $8.37 billion to $8.54 billion from $8.35 billion to $8.58 billion. It maintained its guidance for low single-digit same-store sales growth.
For the current period, Dollar Tree said it expected per-share earnings of 58 cents to 64 cents, along with revenue of $1.97 billion to $2.02 billion. Analysts polled by Thomson Reuters were projecting 64 cents a share and $2.01 billion, respectively.
Same-store sales rose 2% in the period ended May 3.
Overall, the company posted earnings of $138.3 million, or 67 cents a share, up from $133.5 million, or 59 cents a share, in the prior-year period.
Sales rose 7.2% to $2 billion.
The company had projected earnings of 63 cents to 68 cents a share on $1.98 billion to $2.04 billion in revenue.
Gross margin narrowed to 34.8% from 35.2% as input costs rose 7.8% to $1.3 billion.
