What Does Downbeat Guidance From Dollar Tree, Inc. (DLTR) Mean?


It was a double blow for the investors of Dollar Tree, Inc. (NASDAQ:DLTR). The first was that its fourth quarter financial numbers failed to cheer investors and analysts as they were below  expected levels. On top of it, the outlook for the current year also turned out to be a downbeat one. However, that did not deter investors from joining the overall party that the major indices witnessed after the strong economic data.

Working On Integration

Dollar Tree, Inc. (NASDAQ:DLTR), which acquired Family Dollar Stores for $9 billion in July last year, is working on integrating it. The company is engaged in improving the stores of Family Dollar by converting the format and close down others. At the same time, the discount retailer also boosted its merchandise selections. It seems that the integrated firm has yet to realize the gains of the merger completely.

The discount retailer’s disappointing performance was not a surprise one considering that others in the segment too faced similar situations. For instance, Wal-Mart Stores, Inc. (NYSE:WMT) and Macy’s Inc. (NYSE:M) also delivered lower than expected financial results for the fourth quarter. One of the stated reasons for it was the unusually warm weather hurting the seasonal items for cold weather and the retailers were left with little alternative but to offer a big discount to attract cautious customers.

Tepid Outlook

Dollar Tree, Inc. (NASDAQ:DLTR) sees adjusted earnings of 75 – 83 cents a share on revenue of $5.05 – $5.12 billion revenue for the first quarter. Wall Street analysts expect the company to report earnings of 80 cents a share and revenue of $5.10 billion for the same period. For the fiscal year 2016, the company estimated to earn earnings of $3.65 – $3.77 a share and revenue of $20.76 – $21.22 billion. The Street analysts are looking for earnings of $3.76 a share and $20.92 billion revenue for the same period. The company expects same-store sales to remain in the low-single digits growth in the current year.

For the fourth quarter, Dollar Tree, Inc. (NASDAQ:DLTR) delivered net earnings of $229 million, up 10.84% from $206.6 million whereas earnings per share dipped to 97 cents a share from $1 per share in the year-ago quarter. On an adjusted basis, it would have earned $1.01 a share, which was six cents a share weaker than the analysts’ expectations. Its top also jumped to $5.37 billion. Street analysts estimated EPS of $1.07per share and $5.37 billion revenue.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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