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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Dollar Tree    DLTR

DOLLAR TREE (DLTR)
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Dollar Tree same-store sales, forecast disappoint; shares fall

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03/07/2018 | 06:33pm CEST
FILE PHOTO: A shopping cart is seen inside a Dollar Tree discount store in Garden City, New York

(Reuters) - Discount store operator Dollar Tree Inc (>> Dollar Tree) on Wednesday reported disappointing holiday-quarter sales and issued a full-year profit forecast that was below expectations, as it spends more, sending its shares down as much as 16 percent.

(Reuters) - Discount store operator Dollar Tree Inc on Wednesday reported disappointing holiday-quarter sales and issued a full-year profit forecast that was below expectations, as it spends more, sending its shares down as much as 16 percent.

Driver shortages in the trucking industry coupled with rising wages for hourly retail workers in a tight labor market, have increased costs for brick-and-mortar retail chains, which are already pouring a lot of money into their online business.

Focusing on customer service as a tool to one-up Amazon.com Inc has also forced many retailers to pay hourly workers higher wages or dole out bonuses, denting profits further.

Dollar Tree said it would spend $100 million of the benefit from a new corporate tax law to raise wages of hourly workers, give them more work hours and offer paid maternity leave for some employees, joining similar moves made by Walmart Inc (>> Wal-Mart Stores) and Target Corp (>> Target Corporation).

But as a result, rising wage actions and freight costs would hurt full-year profits by $68 million, the company said on a call.

"We expect continued pressure on store payroll based on state's increasing minimum wages and general average hourly rate increases. We have budgeted higher freight costs and diesel costs than a year ago," Chief Financial Officer Kevin Wampler said on a post-earnings call.

For the full-year, Dollar Tree expects a profit of $5.25 to $5.60 per share, much lower than the average analysts' estimate of $5.90 per share, according to Thomson Reuters I/B/E/S.

The Chesapeake, Virginia-based company also reported same-store sales for the key holiday season that missed estimates, as shoppers did not spend as much as expected at its stores.

Analysts had expected sales to get a boost from the pay rises and one-off bonus payments that many companies have given to blue collar workers — Dollar Tree's core customers — as a result of windfalls from changes to U.S. corporate tax rates.

The company's results come a week after biggest rival Walmart Inc (>> Wal-Mart Stores) reported a sharp drop in profit and online sales growth during the holiday period.

Net income more than tripled to $1.04 billion, or $4.37 per share, in the fourth quarter ended Feb. 3, mainly due to a $583.7 million benefit from changes in the U.S. tax code.

Excluding items, Dollar Tree earned $1.89 per share, while net sales rose 13 percent to $6.36 billion, both missing estimates.

(Reporting by Nivedita Balu in Bengaluru; Editing by Saumyadeb Chakrabarty and Shounak Dasgupta)

By Nivedita Balu

Stocks treated in this article : Wal-Mart Stores, Dollar Tree, Target Corporation, Amazon.com
Stocks mentioned in the article
ChangeLast1st jan.
AMAZON.COM -1.51% 1915.01 Delayed Quote.66.25%
DOLLAR TREE -1.33% 85.07 Delayed Quote.-20.73%
TARGET CORPORATION -0.08% 87.31 Delayed Quote.33.92%
WAL-MART STORES 0.16% 95.9 Delayed Quote.-3.04%
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Financials ($)
Sales 2019 22 867 M
EBIT 2019 1 891 M
Net income 2019 1 185 M
Debt 2019 3 561 M
Yield 2019 -
P/E ratio 2019 16,59
P/E ratio 2020 13,84
EV / Sales 2019 1,04x
EV / Sales 2020 0,95x
Capitalization 20 237 M
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Mean consensus OUTPERFORM
Number of Analysts 27
Average target price 97,5 $
Spread / Average Target 15%
EPS Revisions
Managers
NameTitle
Gary M. Philbin President, Chief Executive Officer & Director
Robert L. Sasser Executive Chairman
Michael A. Witynski Chief Operating Officer & Enterprise President
Kevin S. Wampler Chief Financial Officer
Joshua R. Jewett Chief Information Officer
Sector and Competitors
1st jan.Capitalization (M$)
DOLLAR TREE-20.73%20 237
COSTCO WHOLESALE CORPORATION26.13%102 952
THE TJX COMPANIES43.28%68 104
WAL-MART DE MEXICO S A B DE C V15.11%51 439
TARGET CORPORATION33.92%45 956
DOLLAR GENERAL CORPORATION16.40%28 747