Dollar Tree Inc. swung to a loss in its latest quarter, though sales jumped, as the discount retailer integrates its recently-acquired rival.
Shares in the company fell 5.3% in premarket trading, erasing much of their year-to-date gain.
The Virginia-based chain, which in July completed its $9 billion acquisition of Family Dollar Inc., now operates nearly 14,000 stores across the U.S. and Canada.
Dollar stores like Dollar Tree have poached market share from bigger rivals such as Wal-Mart Stores Inc. by offering less-expensive, everyday products and by scattering more small-footprint stores in locations that make it easy for shoppers to run errands quickly.
And in the second quarter, Dollar Tree again outperformed Wal-Mart: Sales at stores open at least a year rose 2.7% in the second quarter, up from a 1.5% increase at Wal-Mart. The result, though, fell short of the 3.3% increase analysts anticipated and was a bit shy of the 2.8% gain competitor Dollar General Corp. reported last week.
Chief Executive Bob Sasser said Dollar Tree has "quickly initiated our integration plan" and said the company is on track to deliver $300 million in annual run-rate synergies by the end of the third year post-acquisition.
As a result of the recently completed acquisition and integration initiatives, Dollar Tree said it would refrain from providing earnings guidance for the current quarter and pulled its per-share profit guidance for the full year. Previously, the company said it expected to earn an adjusted $3.32 to $3.47 this year.
For the business year ending in January, the retailer expects to report revenue of $15.3 billion to $15.52 billion, based on a low single-digit increase in same-store sales and short of the $15.57 billion analysts have predicted.
Overall, Dollar Tree reported a loss of $98 million, or 46 cents a share, down from a profit of $121.5 million, or 59 cents, a year earlier. Excluding merger-related costs, among other items, per-share profit fell to 25 cents from 61 cents. In the Dollar Tree segment, earnings per share rose to 67 cents from 61 cents.
Revenue rose 48% to $3.01 billion. Family Dollar contributed $811.6 million to the top line.
The company had guided for adjusted earnings per share of 63 cents to 68 cents.
Analysts, according to Thomson Reuters, predicted revenue of $3.04 billion.
