Dollar Tree Inc. (DLTR) posted strong fiscal 2011 second-quarter earnings of 77 cents a share, up 26.2% from the year-ago earnings of 61 cents a share, ahead of the Zacks Consensus Estimate of 75 cents a share.
Quarterly Details
Dollar Tree’s total revenue grew 11.9% in the quarter to $1,542.4 million from $1,377.9 million in the prior-year quarter. Same-store sales for the period increased 4.7%. However, total revenue fell short of the Zacks Consensus Estimate of $1,547.0 million.
The company’s quarterly gross profit climbed 12.2% year over year to $542.4 million, while gross margin expanded 10 basis points to 35.2%.
Selling and administrative (S&A) expenses for the quarter grew 9.3% to $388.9 million from $355.7 million in the year-earlier period. However, as a percentage of net sales, S&A expenses contracted 60 basis points to 25.2%.
Consequently, operating income for the quarter grew 20.1% to $153.5 million. Operating margin came in at 10.0%, up 70 basis points from the year-ago period.
Dollar Tree ended the quarter with cash and cash equivalents of $421.6 million compared with a cash balance of $429.3 million in the year-ago period. Long-term obligations for the quarter came in at $250.0 million. Merchandise inventories were up 8.3% year over year to $813.9 million.
During the quarter, the company repurchased 0.1 million shares for $8.2 million. Currently, the company has $249.2 million worth of shares remaining under its share buyback program. Year-to-date, the company spent $121.3 million on capital expenditure.
In the quarter, the company opened 76 stores, relocated 23 stores and shut down operations of 11 stores. Currently, the company operates 4,242 stores in 48 states and 4 Canadian Provinces.
Outlook
Dollar Tree expects total sales in the range of $1.56 billion to $1.60 billion on the back of low single-digit same-store sales growth in the third quarter of fiscal 2011. The company expects to earn in the range of 77 cents to 83 cents a share in the ensuing quarter.
For fiscal 2011, the company expects sales to be in the range of $6.53 billion to $6.62 billion, up from $6.50 billion to $6.63 billion forecasted earlier. The company sees earnings in the range of $3.82 to $3.95 per share for fiscal 2011 compared with its earlier range of $3.69 to $3.85.
Dollar Tree operates as a discount retailer of general merchandise in the southern, southwestern, midwestern, and eastern United States. The company is in direct competition with Dollar General Corporation (DG) and Family Dollar Stores Inc. (FDO).
Currently, Dollar Tree has a Zacks #3 Rank, implying a short-term Hold rating on the stock. Besides, the company retains a long-term Outperform recommendation.
DOLLAR GENERAL (DG): Free Stock Analysis Report
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FAMILY DOLLAR (FDO): Free Stock Analysis Report
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