Dollar Tree Quarterly Profit Drops 38.4%

StocksReuters

Discount retailer Dollar Tree Inc reported better-than-expected quarterly net sales as the company benefited from its $8.5 billion acquisition of Family Dollar.

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However, same-store sales at the Dollar Tree business grew slower than expected.

Sales at stores open at least a year rose 1.7 percent in the third quarter ended Oct. 31, excluding the impact of a strong dollar, below the 1.9 percent expected by analysts polled by research firm Consensus Metrix.

Dollar Tree's net income fell to $81.9 million, or 35 cents per share, from $133 million, or 64 cents per share, a year earlier.

Gross margin fell to 28.3 percent from 34.6 percent a year earlier due to lower-margin products and markdowns related to inventory liquidation at the Family Dollar business.

Analysts had cautioned that integrating Family Dollar would be challenging as the company had been struggling with pricing, merchandising and store layout issues.

The third quarter was the first full quarter after the company completed the Family Dollar acquisition in July.

Excluding items, the company earned $1.33 per share.

Net sales more than doubled to $4.95 billion.

Analysts on average had expected revenue of $4.84 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Sruthi Ramakrishnan in Bengaluru, Additional reporting by Shubhankar Chakravorty; Editing by Maju Samuel and Sriraj Kalluvila)

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