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Dollar Tree Profit Grows

Shares climb as the retailer tops Wall Street's forecast.

Dollar Tree Stores

(DLTR) - Get Dollar Tree, Inc. Report

, noting a strong holiday season, posted a 13% increase in fourth-quarter earnings and topped Wall Street's forecast.

The discount retailer earned $97.6 million, or 96 cents a share, up from $86.5 million, or 81 cents a share, a year earlier. Analysts polled by Thomson Financial expected earnings of 94 cents a share.

Revenue increased 22% to $1.08 billion, slightly shy of Wall Street's forecast of $1.31 billion The latest quarter included an extra week, which added about $70 million to sales.

"Business was strong throughout the quarter," said President and CEO Bob Sasser. "Our stores were ready for the holiday season with an amazing assortment of great merchandise and their execution was exceptional."

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Shares of the company recently were up $1.36, or 4.1%, to $34.35.

Gross margin climbed to 35.7% from 35.3% a year earlier. Dollar Tree said the improvement reflects favorable leverage from the extra week of sales and same-store sales increases. The company also said that, relative to recent quarters, it had a smaller impact from a merchandising shift to lower-margin goods such as consumables.

For the full year, the company earned $192 million, or $1.85 cents a share, up from $173.9 million, or $1.60 a share, a year earlier. Sales increased 17% to $3.97 billion.

Looking ahead, Dollar Tree forecast first-quarter earnings of 32 cents to 35 cents a share, with sales of $935 million to $955 million. Wall Street is looking for the company to earn 34 cents a share on sales of $939.4 million.

Same-store sales, or sales at stores open at least a year, are expected to grow in the low single digits after taking into account the potential negative sales impact of an earlier Easter.

For the full year, the retailer estimates earnings of $1.96 to $2.10 a share, in line with analysts' mean estimate of $2.03.

Dollar Tree projects full-year sales of $4.22 billion to $4.33 billion, compared with Wall Street's forecast of $4.28 billion. Same-store sales are projected to grow 1% to 3%.