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TheStreet Open House

Dollar Tree 2Q Profit Up On Higher Sales

Stock quotes in this article: TGT, WMT

By MICHAEL FELBERBAUM

RICHMOND, Va. (AP) â¿¿ Discount retailer Dollar Tree Inc. said Thursday that its net income increased nearly 26 percent in the second quarter as consumers spent more at its stores that sell goods for $1 or less.

But investors sold off shares as the results and outlook fell short of Wall Street expectations.

Dollar stores, which offer a wide variety of products from beach toys to vitamins, have done well throughout the recession and its aftermath, attracting budget-conscious customers with low prices. They've also promoted themselves as easy to navigate and easy to get to, since they're much smaller than big-box stores like Wal-Mart and Target, and usually have more locations throughout any given city.

"In our current economy with customers struggling to balance their family budgets in the face of persistently high unemployment and now unpredictable fuel prices, many people are finding Dollar Tree to be a destination for high-value consumer products," CEO Bob Sasser said in a conference call with investors.

The Chesapeake, Va.-based chain said it earned $119.2 million, or 51 cents per share, for the three months ended July 28, up from $94.9 million, or 39 cents per share, a year ago, topping analysts' expectations of 47 cents per share.

Net sales increased 10.5 percent to $1.7 billion from $1.54 billion a year ago. Analysts polled by FactSet expected revenue of $1.71 billion.

Sales at stores open at least one year rose 4.5 percent. That comparison is a key gauge of a retailer's health because it excludes stores that recently opened or closed.

The company operates more than 4,520 stores in the U.S. and Canada. It opened 77 stores, expanded or relocated 21, and closed five during the second quarter.

Top-selling items during the quarter included home products, food and beverages, health care supplies and toys.

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