Last year, Dollar Tree (NASDAQ: DLTR) acquired industry competitor Family Dollar to become the largest dollar store chain in the United States. Apparently, this was a good move because the newly-united chain reported quarterly earnings higher than expected. As a result, the company lifted its guidance on Tuesday.
Currently, Dollar Tree (NASDAQ: DLTR) expects sales for the year to fall somewhere between $20.67 billion and $20.77 billion which is mostly in line with the company’s previous estimates. And now the company anticipates per-share earnings to fall in the $3.67 to $3.76 range, falling just shay of its top end guidance of $3.82 a share; though this does not include 9 cents a share in expenses that are related to the company’s debt refinancing during the third quarter.
The new guidance comes out of comps growth falling in the low single-digit range with a 3.9 percent increase in square footage.
Dollar Tree Chief Executive Bob Sasser explains that the integration of Family Dollar continues to profess. He notes, “I am encouraged by our continued progress in building the foundation for a larger, stronger and more profitable Family Dollar business.”
He goes on to say, “The stores are cleaner, the values are greater and our customer feedback scores regarding merchandise assortments and in-stocks have improved.”
With the announcement of the guidance shift, shares of Dollar Tree (NASDAQ: DLTR) rose by 4 percent—now at 9 percent (so nearly doubling)—to $89.50 in pre-market trading, Tuesday.
The company has reported that total sales improved 1.1 percent, to $5 billion, which is just shy of analyst’s $5.08 billion in estimates. In addition, sales at existing stores improved at 1.7 percent, which is better than expected but was driven largely by Dollar Tree (NASDAQ: DLTR) customers spending more in the store, on average.
Dollar Tree reported a third quarter profit of $0.72 per share—roughly $171.6 million—which is up from $0.35 per share ($81.9 million) over last year.
Now the company has lifted its guidance for the final quarter of the year. Dollar Tree now expects per share earnings between $1.24 and $1.33, which is definitely up from its previous estimates of between $1.21 and $1.30 per share.