Dollar Tree 4Q Profit Widens, But Revenue Disappoints

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Helped by lower expenses that led to improved margins, Dollar Tree (NASDAQ:DLTR) reported on Wednesday a stronger-than-expected 20% increase in fourth-quarter profit, though its shares still slipped on much weaker revenue performance and a disappointing sales forecast.

The company expects fiscal 2011 earnings in the range of $3.55 to $3.76 a share on revenue of $6.43 billion to $6.6 billion. Wall Street anticipates earnings of $3.21 a share on revenue of $5.9 billion.

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For the quarter, the Chesapeake, Va-based company posted net income of $162.5 million, or $1.29 a share, compared with $135 million, or $1.02, in the same quarter last year, beating the Street’s view of $1.27 a share.

Revenue for the operator of a chain of discount variety stores offering products for a dollar was $1.73 billion, up 10.7% from $1.56 billion a year ago, helped by a 3.9% increase in comparable store sales, on top of a 6.6% increase in the year-earlier period.

Analysts polled by Thomson Reuters had expected the higher revenue of $1.75 billion.

“Dollar Tree delivered record sales and earnings in both the fourth quarter and fiscal year 2010,” said President and CEO Bob Sasser. “Traffic continues to grow as more customers are responding to Dollar Tree’s excellent values, balanced merchandise assortment and convenient shopping experience.”

The company’s operating margin increased slightly, helped by stronger sales in its Southwest and Southeast regions and lower selling, general and administrative expenses.

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