Dollar Tree profit beats, forecast strong

CHICAGO (Reuters) - Dollar Tree Inc (DLTR.O) posted stronger-than-anticipated quarterly profit and forecast 2010 results above market expectations as consumers continue to buy the retailer's low-priced products, sending its shares to a new all-time high.

Dollar Tree, which sells most of its merchandise for $1, said its average sale per ticket rose 0.8 percent in the fourth quarter, the first quarterly increase of 2009.

"While our traffic continued to be up, as it was in previous quarters, we really see the rise in the average ticket as a real positive," Chief Executive Bob Sasser said on a conference call.

"We believe that as the economy recovers that we're going to have stickiness," he added, referring to the company's ability to hold onto new customers.

The Chesapeake, Virginia-based company's store traffic has surged during the economic downturn as shoppers seek its rock-bottom prices to stretch households budgets. It sells everything from toothpaste to shampoo to toys for $1.

Dollar Tree's profit in the fourth quarter, ended January 30, rose 28 percent to $135 million, or $1.52 a share, from $105.2 million, or $1.15 a share, a year earlier.

Earnings per share were 8 cents above what analysts polled by Thomson Reuters I/B/E/S had forecast.

Operating margin rose 2.1 percentage points to 14 percent.

As Dollar Tree reported earlier this month, fourth-quarter net sales rose 12.4 percent to $1.56 billion. Comparable-store sales rose 6.6 percent as more shoppers came into its stores. Analysts had expected sales of $1.55 billion and a same-store sales increase of 5 percent.

For 2010, Dollar Tree forecast earnings before one-time items of $3.96 to $4.23 a share, compared with analysts' expectations of $3.92.

It sees sales of $5.59 billion to $5.76 billion based on same-store sales growth in the low- to mid-single digit range. Analysts were expecting $5.64 billion.

The company forecast a first-quarter profit of 77 cents to 85 cents a share excluding items, compared with analysts' expectations of 74 cents. Dollar Tree said it will take a one-time, noncash charge in the quarter of 20 cents a share related to a change in inventory accounting.

It expects first-quarter sales of $1.29 billion to $1.33 billion based on a low- to mid-single digit same-store sales gain. Analysts were expecting $1.29 billion and a same-store sales increase of 1.33 percent.

The company, which also sells items such as dishwashing detergent, Campbell's soup and Reynolds Wrap aluminum foil for $1, expects 2010 capital spending of $155 million to $165 million, compared with $164.8 million in 2009.

It plans to open 220 Dollar Tree and 25 Deal$ stores in 2010. Over the longer term, officials reiterated the company can operate up to 7,000 Dollar Tree U.S. stores. The company ended 2009 with 3,806 stores.

Dollar Tree shares rose 10.3 percent, hitting a new all-time high of $54.80 in morning Nasdaq trading.

(Reporting by Ben Klayman; additional reporting by Shradhha Sharma in Bangalore; Editing by Jarshad Kakkrakandy and John Wallace)