We issued an updated research report on
Dollar Tree Inc.
) following the company's dismal fourth-quarter fiscal 2013
The disappointing show by Dollar Tree in the fourth quarter
reflected from earnings per share and sales falling short of the
Zacks Consensus Estimate. Moreover, margins remained under
pressure due to higher operating expenses from ongoing
investments to strengthen its omni-channel selling strategy.
The company reported earnings of $1.02 per share, below the Zacks
Consensus Estimate of $1.05. 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.
Further, given the challenging economic environment, management
took a cautious stance while providing sales and earnings
guidance for the upcoming quarter and fiscal 2014. This wary
outlook triggered a downtrend in the Zacks Consensus Estimate.
The estimate for first-quarter fiscal 2014 fell 2.9% to 67 cents
while for fiscal 2014, it fell 4.3% to $3.14 per share.
However, we remain impressed by the company's fabulous comparable
store sales performance that reflects growth. The company's comps
in fiscal 2013 remained robust despite unfavorable macroeconomic
conditions mainly due to competitive pricing and strategic store
expansion plans, including remodeling and relocations.
Fiscal 2013 represented the 8th consecutive year of positive
comparable-store sales, with comps increasing 2.4% for the year.
For fiscal 2014, Dollar Tree expects comps to increase in the low
AMER APPAREL (APP): Free Stock Analysis
DOLLAR TREE INC (DLTR): Free Stock Analysis
FOOT LOCKER INC (FL): Free Stock Analysis
HANESBRANDS INC (HBI): Free Stock Analysis
To read this article on Zacks.com click here.
Additionally, we believe the company is progressing well with its
growth endeavors like store expansion strategies, omni-channel
growth, revamping of store formats and venture into new markets.
We also commend its strategic investments toward incorporating
technological enhancements focused on boosting its top and bottom
line in the long run.
Further, the company remains well positioned among the leading
dollar stores, especially with its evolving multi-price point
chain. We applaud the company's focus on expanding market share
by increasing its store size to accommodate more
consumables/basic merchandise as well as leveraging an extensive
network of stores to effectively penetrate into its target
During fiscal 2013, the company opened 343 new stores and
relocated 71 stores while it increased square footage by 6.9% to
43.2 million. For fiscal 2014, the company plans to open about
375 stores and renovate, expand, or relocate 75 stores while
increasing its square footage by 7.0%.
Moreover, we believe that the company's sustained focus on price
management, cost containment, inventory management, product mix
offering and merchandise initiatives will boost its sales and
margins further. Further, Dollar Tree's accelerated share
repurchase program reflects management's confidence in the
business and consistency of its cash flow generation ability.
Currently, Dollar Tree carries a Zacks Rank #3 (Hold).
Key Picks from the Sector
Other stocks worth considering in the sector are
American Apparel Inc.
Foot Locker Inc.
), all of which carry a Zacks Rank #2 (Buy).