Dollar Tree (NASDAQ:DLTR), which offers all products for under a dollar, said its third-quarter profit climbed 12% and surpassed Wall Street expectations on Thursday, as comparable sales continued to grow on year-earlier gains.
Discount retailers have seen heightened interest over the last few years as a slumped economy has hammered consumer sentiment and sent customers to cheaper stores. Like many others in the retail world, Dollar Tree has suffered under higher raw materials costs, however it has been able to partially offset that challenge through higher demand at its more established stores.
The Chesapeake, Va.-based discount variety store operator reported net income of $104.5 million, or 87 cents a share, compared with $93.2 million, or 73 cents a share, in the same quarter last year.
Analysts in a Thomson Reuters poll predicted, on average, earnings of just 83 cents.
Revenue for the three months ended Oct. 29 was $1.6 billion, up 11.9% from $1.43 billion a year ago, narrowly beating the Street’s view of $1.58 billion. The results were led by a 4.8% increase in comparable sales, or those at stores open longer than a year, on top of an 8.7% gain last year.
“Dollar Tree achieved double-digit growth in sales, operating margin and earnings per share against a very strong performance last year,” the company’s CEO, Bob Sasser, said in a statement.
Looking ahead, the company predicts fourth-quarter sales in the range of $1.89 billion to $1.94 billion, based on low- to mid-single digit positive comparable sales, with earnings between $1.50 and $1.57 a share. Wall Street is looking for a profit of $1.54 a share on sales of $1.91 billion.
For the full-year, Dollar Tree sees sales between $6.57 billion and $6.62 billion on earnings in the range of $3.94 to $4.01 a share. Analysts have forecasted a profit of $3.95 a share on revenue of $6.58 billion.