Dollar Tree Swings to a Loss, Though Sales Soar After Deal
01 September 2015 - 11:05PM
Dow Jones News
By Lisa Beilfuss
Dollar Tree Inc. swung to a loss in its latest quarter, though
sales jumped, as the discount retailer integrates its
recently-acquired rival.
Shares in the company fell 5.3% in premarket trading, erasing
much of their year-to-date gain.
The Virginia-based chain, which in July completed its $9 billion
acquisition of Family Dollar Inc., now operates nearly 14,000
stores across the U.S. and Canada.
Dollar stores like Dollar Tree have poached market share from
bigger rivals such as Wal-Mart Stores Inc. by offering
less-expensive, everyday products and by scattering more
small-footprint stores in locations that make it easy for shoppers
to run errands quickly.
And in the second quarter, Dollar Tree again outperformed
Wal-Mart: Sales at stores open at least a year rose 2.7% in the
second quarter, up from a 1.5% increase at Wal-Mart. The result,
though, fell short of the 3.3% increase analysts anticipated and
was a bit shy of the 2.8% gain competitor Dollar General Corp.
reported last week.
Chief Executive Bob Sasser said Dollar Tree has "quickly
initiated our integration plan" and said the company is on track to
deliver $300 million in annual run-rate synergies by the end of the
third year post-acquisition.
As a result of the recently completed acquisition and
integration initiatives, Dollar Tree said it would refrain from
providing earnings guidance for the current quarter and pulled its
per-share profit guidance for the full year. Previously, the
company said it expected to earn an adjusted $3.32 to $3.47 this
year.
For the business year ending in January, the retailer expects to
report revenue of $15.3 billion to $15.52 billion, based on a low
single-digit increase in same-store sales and short of the $15.57
billion analysts have predicted.
Overall, Dollar Tree reported a loss of $98 million, or 46 cents
a share, down from a profit of $121.5 million, or 59 cents, a year
earlier. Excluding merger-related costs, among other items,
per-share profit fell to 25 cents from 61 cents. In the Dollar Tree
segment, earnings per share rose to 67 cents from 61 cents.
Revenue rose 48% to $3.01 billion. Family Dollar contributed
$811.6 million to the top line.
The company had guided for adjusted earnings per share of 63
cents to 68 cents.
Analysts, according to Thomson Reuters, predicted revenue of
$3.04 billion.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 01, 2015 08:50 ET (12:50 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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