Dollar Tree Winning; Fred's Losing

Dollar Tree wins with $1 products, but Fred's is hurt by increasing promotions.
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NEW YORK(

TheStreet

) -- Despite the built-in liability of selling most of its merchandise for only $1,

Dollar Tree

(DLTR) - Get Report

reported both higher profit and sales in the third-quarter and says earnings for the remainder of the year could come in above Wall Street's forecast.

During the quarter, Dollar Tree more than doubled its profit, earning $68.2 million, or 76 cents a share, compared with $43.1 million, or 47 cents in the year-ago period. Wall Street predicted earnings of 66 cents a share.

Sales jumped 13% to $1.25 billion from $1.11 billion, while same-store sales rose 6.5%.

The company expected fourth-quarter earnings in the range of $1.30 to $1.39 a share, and full-year profit between $3.34 and $3.43 a share. Analysts are calling for fourth-quarter earnings of $1.35 a share and full year of $3.25 a share.

Meanwhile, rival

Fred's

(FRED)

did not have the same luck with its discount strategy, with its profit falling 17% to $5 million, or 13 cents a share, in line with analyst estaimates.

Fred's attributed the weaker-than-expected results to a significant increase in promotions.

On the upside, Fred's sales inched up 1% to $422.4 million from $418 million and same-store sales grew 1%.

Looking ahead, Fred's expects fourth-quarter earnings in the range of 17 cents to 24 cents a share, and full-year earnings between 62 cents and 69 cents.

-- Reported by Jeanine Poggi in New York

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