Dollar Tree, Inc. (NASDAQ:DLTR) shares were on the rise Tuesday morning, following a better than expected earnings report and upbeat forecast.
The Chesapeake, Virginia-based company reported Q3 adjusted net income of $0.81 per share, which was $0.03 better than the Wall Street Consensus estimate of $0.78. Revenues rose 1.1% from last year to $5 billion, falling just short of analysts’ view of $5.06 billion.
Same-store sales rose 1.7% on a constant currency basis, down from a 2.1% growth rate the year-ago period. This marked Dollar Tree’s 35th straight quarter of rising same-store sales, driven by rising customer count and average ticket sizes.
Gross margin also increased to 30.4% in the latest quarter, up from 28.3% last year and aided by lower merchandise and freight costs.
Looking ahead, DLTR forecast Q4 earnings-per-share (EPS) ranging from of $1.24 to $1.33, which straddles Wall Street’s view of $1.30 per share. Q4 revenues are expected to range from $5.59 to $5.69 billion, which would likely exceed analyst estimates of $5.6 billion. Dollar Tree also sees comparable sales rising in the low single-digits during the fourth quarter.
CEO Bob Sasser commented via press release:
“I am encouraged by our continued progress in building the foundation for a larger, stronger and more profitable Family Dollar business. The stores are cleaner, the values are greater and our customer feedback scores regarding merchandise assortments and in-stocks have improved. As a combined organization, we are uniquely positioned to efficiently grow our businesses to better serve more customers in more markets. We are well-positioned and prepared for the upcoming fourth quarter and holiday selling season.”
Dollar Tree shares rose $6.01 (+7.33%) to $88.00 in premarket trading Tuesday. Prior to today’s report, DLTR had gained 6.18% year-to-date, versus a 7.99% rise in the benchmark S&P 500 index in the same period.