(Corrects company name in headline to Dollar Tree from Dollar
* Expects fourth-qtr sales $2.25 bln-$2.31 bln vs est $2.32
* Third-qtr earnings/share $0.58 vs est $0.60
* Third-qtr sales rise 9.5 pct; same-store sales rise 3.1
* Shares fall as much as 6 percent
By Siddharth Cavale
Nov 21 Dollar Tree Inc forecast
current-quarter results below estimates after reporting
disappointing quarterly same-store sales, but analysts said it
was too early to write off the discount store chain that is
fighting weak consumer spending.
The company's shares fell as much as 6.4 percent on Thursday
to a two-month low.
"We remain bullish on the dollar store sector," Guggenheim
Securities analyst John Heinbockel wrote in a note.
He predicted that dollar stores, including Dollar General
Corp and Family Dollar Stores Inc, were well
placed to expand margins by taking significant market share from
food and drug retailers.
Dollar stores have battled a weak economy and increased
competition from large discount chains such as Wal-Mart Stores
Inc, which are increasingly chasing budget-conscious
consumers by offering more items priced at $1.00 or less.
Dollar Tree said on Thursday that it expects fourth-quarter
earnings of $1.01-$1.07 per share on sales of $2.25
Analysts on average were expecting fourth-quarter earnings
of $1.10 per share, on revenue of $2.32 billion, according to
Thomson Reuters I/B/E/S.
Six fewer selling days between Thanksgiving and Christmas
are expected to hurt sales by $25 million, Chief Financial
Officer Kevin Wampler said on a post-earnings conference call
The company expects comparable-store sales for the holiday
quarter to be in the low-single digit percentage range.
"At first glance Dollar Tree's Q3 results were a bit
disappointing, but not entirely surprising given the ongoing
macroeconomic headwinds on the low income consumer," BB&T
Capital Markets analyst Anthony Chukumba wrote in a note
Dollar Tree reported a 3.1 percent increase in same-store
sales in the third quarter ended Nov. 2, helped by sales of
consumables, which include frozen foods and beverages, and
seasonal items, Chief Executive Officer Bob Sasser.
Net income fell to $125.4 million, or 58 cents per share,
from $155.4 million, or 68 cents per share, a year ago.
The company said last year's earnings included a one-time
gain of 17 cents per share related to the sale of its ownership
interest in Ollie's Holdings Inc.
Analysts had expected Dollar Tree to earn 60 cents per share
and its same-store sales to rise 4.5 percent.
Net sales rose 9.5 percent to $1.88 billion, but missed
analysts' average expectations of $1.91 billion.
The company's results mirrored those of Target Corp,
which reported a smaller-than-expected 0.9 percent rise in
comparable store sales, blaming what it called "constrained"
Dollar Tree shares, which have risen 42 percent in one year
through Wednesday's close, were down 5.3 percent at $55.77 on
the Nasdaq on Thursday.
(Reporting by Siddharth Cavale in Bangalore; Editing by Joyjeet