Dollar Tree Inc.
) reported robust results for the fourth quarter and fiscal 2012.
The company's quarterly earnings of $1.01 per share came in ahead
of the Zacks Consensus Estimate of 99 cents.
Moreover, it outperformed the year-ago earnings of 80 cents
per share, registering an upside of 26.3% year over year. The
solid results came on the back of higher sales and improved
margins, which benefited from increased average basket size and
the inclusion of an additional week in fiscal 2012.
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In fiscal 2012, earnings per share of $2.51 rose 24.9% year over
year, while it was in line with the Zacks Consensus Estimate.
Earnings for the year exclude a one-time gain of 17 cents related
to the sale of its ownership interest in Ollie's Holdings Inc.
This Zacks Rank #3 (Hold) stock, which directly competes with
Dollar General Corporation
Family Dollar Stores Inc.
), posted revenue growth of 15.4% in the quarter to $2,245.8
million from $1,945.6 million in the prior-year quarter and
surpassed the Zacks Consensus Estimate of $2,233 million. Higher
sales were primarily driven by the inclusion of an additional
week and an improvement of 2.4% in comparable store sales (comps)
over the prior-year period comps of 7.3%.
Total revenue in fiscal 2012 rose 11.5% year over year to
$7,394.5 million, while it outdid the Zacks Consensus Estimate of
$7,379 million. Full year comps rose 3.4% versus an increase of
6.0% registered in fiscal 2011.
Dollar Tree's quarterly gross profit climbed nearly 15.8% year
over year to $850.8 million, while gross margin expanded 10 basis
points to 37.9%. On the other hand, selling, general and
administrative expenses escalated 12.7% to $487.3 million.
However, as a percentage of revenue, it contracted 50 basis
points to 21.7%.
Consequently, operating income for the quarter bolstered 20.4% to
$363.5 million. Operating margin came in at 16.2%, up 70 bps from
the year-ago period, primarily benefiting from the increase in
gross margin and the contraction in selling, general and
administrative expenses as a percentage of sales.
Dollar Tree ended fiscal 2012 with cash and cash equivalents of
$399.9 million compared with cash balance of $288.3 million at
the end of fiscal 2011. The company had an outstanding long-term
obligation of $257.0 million as of Feb 2, 2013.
Merchandise inventories were up 12.0% year over year to $971.7
million. During fiscal 2012, the company spent $312.2 million on
During the quarter, the company bought back 2.7 million shares
worth about $104.9 million, bringing the full year share
repurchases to 7.7 million shares for a total of $340.2 million.
At year-end, Dollar Tree had shares worth $860 million remaining
under its share buyback program.
In the fourth quarter, the company further expanded its store
network by opening 47 stores, expanding or relocating 6 stores
and shutting down 6 stores. This brings the company's total store
count to 4,671 in 48 states and 5 Canadian Provinces.
For the first quarter of fiscal 2013, Dollar Tree expects total
sales in the range of $1.84 billion - $1.89 billion on the back
of low single-digit positive comparable-store sales growth as
well as 6.8% square footage growth. Further, the company
anticipates earnings in the range of 53 cents - 58 cents a share
in the upcoming quarter.
For fiscal 2013, the company anticipates sales to reach the $7.79
billion - $7.97 billion range. Comps for the year are estimated
to be in the low single-digit percentage range, while the company
expects square footage growth of 7.3%. It projects earnings in
the range of $2.54 - $2.74 per share for fiscal 2013, excluding
any impact from share repurchases.
Dollar Tree is considered one of the best-positioned dollar store
concepts, especially with its evolving multi-price point chain.
We believe that the company is doing a commendable job internally
by managing controllable inputs, including reducing stem miles,
while increasing back-haul opportunities.
Another discount retailer exhibiting an impressive performance of
The TJX Companies Inc.
), which carries a Zacks Rank #2 (Buy).