Dollar Tree Proves It's All About Price

Discounters are proving it really is all about price -- or at least it is when consumers don't have any money.

Dollar Tree(DLTR Quote) posted a ridiculously robust 39% uptick in first-quarter profit along with a 14% jump in sales, as store traffic continued to increase.

Shares in the company were up more than 4%, to $46.22, on higher than the daily average volume, in early morning trading.

During the quarter, the retailer earned $60.4 million, or 66 cents a share, compared with a profit of $43.6 million, or 48 cents a share, in the first quarter of 2008. Analysts expected earnings of 60 cents.

Sales rose to $1.20 billion from $1.05 billion, while same-store sales shot up 9.2%.

Beyond just great numbers, the company is actually growing -- unlike its full-priced competitors, which are shuttering doors and paring down inventories. During the first quarter, Dollar Tree opened 79 stores, closed 3 stores, and expanded or relocated 25 stores. Retail-selling square footage increased 6.4% over a year ago, to 31 million square feet. Total merchandise inventories increased 5.4%.

The company's momentum is expected to continue in the second half of the year. Dollar Tree predicts earnings of 47 cents to 51 cents in the second quarter on revenue in the range of $1.17 billion to $1.20 billion, as same-store sales grow by a low-to mid-single digit percentage. For the full-year earnings are forecast in the range of 2.75 to $2.90 a share.