TLDR
- Q4 adjusted earnings per share reached $2.56, surpassing the $2.53 analyst forecast
- Revenue climbed 9% year-over-year to $5.45 billion with comparable store sales increasing 5%
- First quarter forecast disappointed Wall Street on both earnings and revenue projections
- Annual EPS outlook of $6.50–$6.90 encompasses the $6.70 analyst consensus
- Shares declined approximately 3.8% in Monday trading after the earnings release
Dollar Tree (DLTR) delivered fourth-quarter results that exceeded expectations Monday, yet shares tumbled as the company’s forward-looking projections fell short of investor hopes.
The value retail chain announced adjusted profits of $2.56 per share for the period ending January 31. This figure narrowly topped the Street’s $2.53 projection. The results marked a dramatic reversal from the prior-year quarter when the company recorded a $17.17 per share loss.
Revenue reached $5.45 billion during the quarter, representing a 9% increase from the same period last year and meeting analyst expectations. Comparable store sales advanced 5%, slightly outpacing the 4.9% consensus estimate.
The comparable sales improvement stemmed from a 6.3% increase in average transaction value. However, this gain was tempered by a 1.2% decline in customer traffic — indicating shoppers purchased more when they visited, but store visits decreased overall.
CEO Mike Creedon highlighted the company’s impressive track record of two decades of consecutive comparable sales growth, demonstrating the retailer’s enduring appeal as a value and convenience shopping option.
Guidance Misses the Mark
The outlook for coming quarters proved problematic for investors. Dollar Tree projected Q1 adjusted earnings between $1.45 and $1.60 per share, with a $1.52 midpoint. This fell below the $1.56 analyst consensus.
Revenue projections for the first quarter ranged from $4.9 billion to $5.0 billion, compared to Wall Street’s $4.96 billion expectation. The company forecasted comparable sales growth of 3% to 4%, below the 3.6% analyst estimate.
For the complete fiscal year, management anticipates adjusted earnings of $6.50 to $6.90 per share on revenue of $20.5 billion to $20.7 billion. While these ranges include the consensus estimates of $6.70 EPS and $20.66 billion in sales, they skew toward the lower end of expectations.
Dollar General Set a Similar Tone
Dollar Tree’s conservative stance mirrors industry trends. Competitor Dollar General released earnings the previous week and similarly signaled slower sales momentum for the coming year.
Dollar General attributed recent winter weather disruptions as a headwind for the current quarter. The company also noted broader consumer spending uncertainty as a contributing factor.
Dollar Tree shares dropped 3.8% Monday. Dollar General stock posted modest gains the same day.
During Tuesday’s premarket session, Dollar Tree recovered some ground and traded relatively flat before the opening bell. Earlier in the session, shares had declined as much as 2.6% to $104.63.
The fourth-quarter performance represents a substantial improvement from the year-earlier period, when Dollar Tree posted a $3.7 billion net loss — primarily due to special charges.
This quarter’s net income totaled $506.1 million, translating to $2.53 per share on a reported basis.
