By Chelsey Dulaney
Dollar Tree Inc. posted its strongest quarterly sales growth at
existing stores since 2011 as the discount retailer pushes forward
with its $8.5 billion deal to buy Family Dollar Stores Inc.
Dollar Tree also bumped up its outlook for the year. The company
now expects earnings of $2.97 to $3.04 a share, compared with its
previous guidance of $2.94 to $3.06 a share. It now forecasts
revenue of $8.52 billion to $8.58 billion, compared with its
previous range of $8.44 billion to $8.55 billion.
Dollar Tree agreed in July to buy Family Dollar in a move to
consolidate the market serving low-income shoppers and building a
stronger competitor to rivals like Wal-Mart Stores Inc. The
agreement sparked a rival $9.1 billion bid for Family Dollar from
Dollar General Corp., which Family Dollar has rebuffed, claiming
the antitrust risks are too high.
On Wednesday, Family Dollar delayed the shareholder vote on
Dollar Tree deal as it awaits an update on the divestitures U.S.
antitrust regulators will require to approve the deal. Dollar Tree
has said it would be willing to divest as many stores as possible,
or sensible, to get its deal done, and the companies amended their
merger agreement to reflect that commitment.
Overall, Dollar Tree reported a profit for the quarter ended
Nov. 1 of $133 million, or 64 cents a share, up from $125.4
million, or 58 cents a share, a year earlier. Excluding items,
per-share earnings were 69 cents.
The company said the results included $14.3 million in costs
tied to the Family Dollar deal.
Sales increased 11% to $2.1 billion.
The company had projected 61 cents to 66 cents a share in
earnings on revenue of $2.02 billion to $2.07 billion
Gross margin narrowed 0.4 points to 34.6% on increased freight
costs.
Sales at existing locations rose 5.9%, the company's 27th
straight quarter of growth.
Looking to the current quarter, Dollar Tree said it expects
earnings of $1.07 to $1.14 a share on revenue of $2.39 billion to
$2.46 billion. Analysts polled by Thomson Reuters were expecting
$1.13 a share in earnings and $2.45 billion in revenue.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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