Dollar Tree Reports Improved Sales Growth in Q4

Dollar Tree, Inc. (NASDAQ:DLTR)’s Fiscal 2012 Q4 profits surged 22 percent year-over-year on improved sales growth. During the quarter, it was noted that shoppers spent more compared with a year earlier. “On top of a very strong fourth-quarter performance in 2012, average basket size increased and customers responded this year in record numbers,” remarked the company CEO and president, Bob Sasser.

Dollar Tree Reports Improved Sales Growth in Q4

Revenue for the quarter, which ended on Feb 2nd, came in at $2.25 billion, marking a 15 percent increase from the previous year. This rosy sales growth translated into the $228.6 million, or $1.01 a share, profit that was recorded during the quarter; a 22 percent increase from $187.9 million, or 80 cents, a year earlier. The fourth quarter earnings came in line with the company’s initial forecast. Dollar Tree had, in November, forecasted earnings in the range of 97 cents to $1.02 and revenue in the range of $2.2 billion to $2.26 billion.

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Other than the notable increase in profit, Gross margins rose to 37.9 percent from 37.8 percent. At the close of the quarter, the discount retailer had 4671 stores, up 320 units from 4351 a year earlier.

Although the company’s same-store sales increased 2.4 percent during the quarter, last year’s same store sales were noted to have increased by 7.3 percent. In essence, same store sales increased, albeit at a decreasing rate.

For the ongoing quarter, Dollar Tree forecast earnings in the range of 53 cents to 58 cents and revenue in the range of $1.84 billion to $1.89 billion. Analysts’ forecast profits of 58 cents and revenue of $1.87 billion.

Dollar Tree, Inc. (NASDAQ:DLTR), which is synonymous with selling items at $1 or less, has, for the past several years, rode on the back of the tepid economic growth. Its low priced items have acted as the ideal incentive at a time of recession. Analysts are, however, concerned that efforts being made by big wigs like Wal-Mart Stores, Inc. (NYSE:WMT) could compromise the sustainability of Dollar Tree’s growth.