Dollar Tree Inc. (DLTR) - Get Report posted softer-than-expected third quarter earnings Tuesday, but held to its full-year sales forecasts even as it cautioned that tariff increases and store closure costs would trim its bottom line.
Dollar Tree said diluted earnings for the three months ending on November 2 came in at $1.08 per share, down 4.4% from the same period last year and 5 cents shy of the Street consensus forecast. Group revenues, however, rose 3.8 to $5.75 billion and nudged just ahead of analysts' estimates.
Looking into the final months of its fiscal year, which ends in January, Dollar Tree said it sees same store sales that are either flat or growing by "low single digits" with net sale of between $23.62 billion and $23.74 billion. Store closure and renovation costs, however, will take about 5 cents per share from full-year earnings, while tariffs will increase the cost of goods sold by $19 million and clip fourth quarter earnings by 6 cents per share.
"The third quarter represented another period of solid sales performance for both brands, Dollar Tree and Family Dollar. Our store optimization efforts and sales driving initiatives are working," said CEO Gary Philbin. "Fiscal 2019 has been a unique year as the result of several factors: the material acceleration in our Family Dollar store optimization initiatives, the consolidation of our two store support centers into southeast Virginia, the global helium shortage, and the continued uncertainty regarding trade and the related tariffs."
Dollar Tree shares were marked 15.7% lower at the start of trading Tuesday to change hands at $94.90, a move that trims the stock's year-to-date gain to around 5%.
Dollar Tree's fiscal year earnings outlook was cut to a range of $4.66 to $4.76 per share, a significant distance from its prior forecast of $4.90 to $5.11, adding that the new estimate includes 28 cents in "discrete cost" adjustments and 5 cents in store closure costs.