Dollar Tree Inc.
) reported fourth-quarter fiscal 2013 earnings of $1.02 per
share, which came below the Zacks Consensus Estimate of $1.05.
However, quarterly earnings represented nearly a 1% increase from
$1.01 earned in fourth-quarter fiscal 2012. Fourth-quarter
results compare against an additional week in the prior-year
quarter that contributed 8 cents to earnings per share last year.
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Revenue declined by a marginal 0.5% on a year-over-year basis in
the quarter to $2,234.9 million and fell short of the Zacks
Consensus Estimate of $2,278.0 million. However, comparable store
sales (comps) increased 1.2% against a 2.4% increase recorded in
the prior-year period, primarily driven by improved traffic.
Despite the lower-than-expected results, shares of Dollar Tree
made a nearly 5% jump on the index, closing trade at $55.29 per
Dollar Tree's quarterly gross profit declined 3.0% year over year
to $825.2 million, while gross margin contracted 100 basis points
(bps) to 36.9%. On the other hand, selling, general and
administrative (SG&A) expenses slid 2.1% to $477.0 million.
As a percentage of revenues, it contracted 40 basis points year
over year to 21.3%.
Consequently, operating income for the quarter declined 4.2% to
$348.2 million. Operating margin came in at 15.6%, down 60 bps
from the year-ago period.
For fiscal 2013, the company's earnings came at $2.72 per share,
which fell short of the Zacks Consensus Estimate of $2.76 but was
higher than $2.68 reported in fiscal 2012. Notably, the company's
fiscal 2012 earnings included a one-time $60 million gain
associated with the sale of its ownership interest in Ollie's
Holdings Inc. in the third quarter of fiscal 2012 and $125
million additional earnings from the 53rd week in fiscal 2012.
Revenue for the year rose approximately 6% to $7,840.3 million.
However, the company's top line missed the Zacks Consensus
Estimate of $7,888 million.
Balance Sheet and Capex
Dollar Tree ended fiscal 2014 with cash and cash equivalents of
$267.7 million compared with cash balance of $399.9 million at
fiscal year-end 2012.
Merchandise inventories were $1,035.3 million compared with
$971.7 million as of Feb 2, 2013. During the fiscal year, the
company spent $330.1 million on capital expenditure as against
$312.2 million spent in the prior year.
During fiscal 2013, the company bought back nearly $1.1 billion
worth of shares, which included about $1.0 billion from the
Accelerated Share Repurchase (ASR) program authorized in Sep
2013. Under the ASR program, the company bought back a total of
15 million shares and expects to complete the program on or
before Jun 2014. Additionally, Dollar Tree has authorization
worth $1.0 billion remaining under its share buyback program.
In the quarter, the company further expanded its store network by
opening 51 stores, expanding or relocating 4 stores and shutting
down 12 stores. Retail selling square footage grew 6.9% year over
year to 43.2 million square feet in the quarter.
During the full year, the company opened about 343 new stores and
expanded or relocated 71 existing stores, making for a total of
414 store projects entered in the year. As of Feb 1, 2014, the
company operated 4,992 stores in 48 states and 5 Canadian
For the first quarter of fiscal 2014, Dollar Tree expects total
sales in the range of $1.98-$2.04 billion on the back of low
single-digit comps growth. Further, the company anticipates
earnings in the range of 63 - 68 cents per share in the upcoming
For fiscal 2014, the company anticipates sales to reach the
$8.35-$8.58 billion range based on low single-digit positive
comps growth. Dollar Tree projects earnings for fiscal 2014 to
come in the range of $2.91-$3.13 per share, excluding any impact
from share repurchases.
The company expects capital expenditures of nearly $350 million -
$360 million for fiscal 2014, slated towards the opening of new
stores and remodeling existing stores. Depreciation and
amortization expenses are projected to range from $200 million to
$210 million for fiscal 2014. Tax rate for the first quarter is
estimated at 38.4%, while in fiscal 2014 it is expected to be
In fiscal 2014, the company plans to open nearly 375 new stores
and relocate 75 stores for a total 450 projects across the U.S.
and Canada. Square footage is expected to augment 6.7% year over
year in the first quarter of fiscal 2014 and nearly 7% year over
year in fiscal 2014.
Dollar Tree is considered among 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
in managing controllable inputs, including reducing stem miles,
while increasing back-haul opportunities at the same time.
Dollar Tree currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the retail space include
Christopher & Banks Corporation
Finish Line Inc.
Deckers Outdoor Corp.
). Christopher & Banks have a Zacks Rank #1 (Strong Buy),
while Finish Line and Deckers carry a Zacks Rank #2 (Buy).