Dollar Tree Inc.
) reported robust results for the first quarter of fiscal 2013.
The company's quarterly earnings of 59 cents per share came in
ahead of the Zacks Consensus Estimate of 57 cents. Moreover, it
outperformed the year-ago earnings of 50 cents per share,
registering a year-over-year upside of 18%. The solid results
came on the back of higher sales and improved margins.
The company posted revenue growth of 8.3% in the quarter to
$1,865.8 million from $1,723.6 million in the prior-year quarter
but fell short the Zacks Consensus Estimate of $1,875 million.
During the quarter, sales benefited from a 2.1% increase in
comparable store sales (comps) over the prior-year period comps
Dollar Tree's quarterly gross profit climbed nearly 8.8% year
over year to $656.0 million, while gross margin expanded 20 basis
points to 35.2%. On the other hand, selling, general and
administrative expenses escalated 6.0% to $439.4 million.
However, as a percentage of revenue, it contracted 50 basis
points to 23.6%.
Consequently, operating income for the quarter bolstered 15.2%
to $216.6 million. Operating margin came in at 11.6%, up 90 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 first-quarter fiscal 2013 with cash and cash
equivalents of $383.3 million compared with cash balance of
$382.3 million at the end of first-quarter fiscal 2012. The
company had an outstanding long-term obligation of $257.0 million
as of May 4, 2013.
Merchandise inventories were up 15.4% year over year to
$1,009.5 million. During the first quarter, the company spent
$103.2 million on capital expenditure.
During the quarter, the company bought back 1.5 million shares
worth about $68.4 million. At quarter-end, Dollar Tree had shares
worth $791.3 million remaining under its share buyback
In the first quarter, the company further expanded its store
network by opening 94 stores, expanding or relocating 16 stores
and shutting down 2 stores. This brings the company's total store
count to 4,763 in 48 states and 5 Canadian Provinces as of May 4,
For the second quarter of fiscal 2013, Dollar Tree expects
total sales in the range of $1.81 billion - $1.86 billion on the
back of low single-digit positive comparable-store sales growth.
Further, the company anticipates earnings in the range of 52
cents - 57 cents a share in the upcoming quarter.
For fiscal 2013, the company anticipates sales to reach the
$7.81 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 $2.61 - $2.77 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.
Dollar Tree currently holds a Zacks Rank #3 (Hold). Stocks
that are performing well among retail-wholesale sector include
Big 5 Sporting Goods Corp.
), all of which carry a Zacks Rank #1 (Strong Buy).
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