U.S. Consumers in Dire Straits, Dollar Tree Reports Strong Q2 Results

Dollar Tree
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In yet another sign that the American consumer is in dire straits and being stretched financially, Dollar Tree, Inc. (NASDAQ:DLTR) reported better-than-expected second-quarter results and a strong outlook for the remainder of fiscal 2017.

At a time when most major retailers are struggling, the discount store chain continues to report strong financial results. In the just completed second quarter, Dollar Tree announced that second quarter revenue advanced 5.7% year-over-year to $5.28 billion from $5.0 billion in the same prior-year period. Same-store sales for the Dollar Tree banner increased 3.9%.

Second-quarter net income came in at $233.8 million, or $0.98 per share. This represents a 37.5% increase over the $170.2 million, or $0.72 per share in the second quarter of 2016. Analysts were projecting second-quarter earnings per share (EPS) of $0.87 on revenue of $5.24 billion.

For the first six months of 2017, consolidated sales increased 4.8% to $10.57 billion from $10.08 billion in the first half of last year. Same-store sales for the Dollar Tree banner increased 2.9%.

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Net income increased 7.8% to $434.3 million from $402.8 million in the first six months of 2016. Diluted EPS increased 7.6% to $1.83, compared to $1.70 in the prior year’s period. Excluding a $53.5 million receivable impairment, adjusted diluted earnings per share increased 15.9% to $1.97.

Looking ahead, Dollar Tree now expects third-quarter EPS to be in the range of $0.83 and $0.90, with sales of $5.2 billion to $5.29 billion. Analysts are forecasting third-quarter EPS of $0.87 on sales of $5.27 billion.

For the full year, the company expects to report EPS of $4.44 to $4.60 and sales of $22.07 billion to $22.28 billion. The Wall Street consensus is for EPS of $4.46 and sales of $22.13 billion.

We are confident that we are well-positioned for the back half of 2017 and look to deliver value to our long-term shareholders in the years ahead,” said Bob Sasser, CEO of Dollar Tree, Inc.

While many major retailers are shuttering stores, cutting staff, and filing for Chapter 11, discount chains are doing the complete opposite. Of the 3.298 major store openings announced in 2017, Dollar Tree, Inc. and Dollar General Corp. (NYSE:DG) are responsible for 1,940, or 58% of that total.

Sources:

Dollar Tree Reports Results for the Second Quarter of Fiscal 2017,” Dollar Tree, Inc., August 24, 2017.

Store Openings and Closings Tracker,” Fung Global Retail & Tech, August 18, 2017.

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