Dollar Tree Erupts 20% After 'Very Solid' Results

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Dollar Tree Erupts 20% After 'Very Solid' Results
Credit: © Reuters.

By Senad Karaahmetovic

Dollar Tree (NASDAQ: DLTR ) reported better-than-expected Q1 comparable sales, sending its shares up in premarket trading.

DLTR reported a Q1 enterprise comparable sales growth of 4.4%, topping the expected growth of 2.14%. Consolidated net sales came in at $6.9 billion, up 6.5% YoY and above the analyst consensus of $6.77 billion.

Dollar Tree's net sales totaled $3.78 billion, beating the analyst consensus of $3.58 billion. The company reported $3.12 billion in Family Dollar net sales, while analysts were looking for $3.2 billion.

For Q2, the company expects EPS in the range of $1.45 to $1.55, short of the consensus estimates of $1.73 per share. DLTR expects Q2 net sales in the range of $6.65 billion to $6.78 billion, compared to the analyst consensus of $6.75 billion.

On a full-year basis, DLTR expects EPS in the range of $7.80 to $8.20, up from its previous forecast range of $7.60 to $8, and compared to the estimated $8 per share.

The company expects FY net sales to land between $27.76 billion and $28.14 billion, up from the previous forecast of $27.22 billion to $27.85 billion, while analysts were expecting $27.95 billion.

“We believe now is the ideal time to accelerate investments focused on driving growth through improved associate and shopper experience, while propelling greater efficiencies,” the company said.

Citi analyst Paul Lejuez said DLTR delivered “a very solid quarter” after the company made “a quick move in the right direction.”

“Results were strong and guidance indicates the momentum continues. Mgmt. also announced it will make strategic investments, which should be viewed positive, as it signals opportunity to realize improvement and close the gap to peers. We expect shares to trade higher,” the analyst said.

Telsey Advisory Group analyst Joseph Feldman also reflected positively.

“Overall, Dollar Tree executed well in 1Q22, and the price increase at core Dollar Tree is fueling results and the raised 2022 guidance. The company remains well-positioned to gain market share, given its convenient locations, value merchandise, and transformative initiatives.”

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