Shares of discount retailer Dollar Tree (DLTR) - Get Report shot up in after-hours trading Wednesday after the company announced it beat analysts' first-quarter earnings estimates as sales rose more than 15%.
Dollar Tree said net income for the quarter ended May 1 rose to $35.2 million, or 31 cents a share, from $32.8 million, or 29 cents a share. Sales rose to $710.3 million from $615.6 million.
Analysts had been expecting the company to earn 29 cents a share.
Dollar Tree's shares were trading up nearly 6% to $27 after closing the regular session to $25.52, up 2 cents.
"Our inventory controls are better, and the flow of product into the distribution centers and stores is much improved over last year," said President and CEO Bob Sasser in a statement. "Point-of-sale data is allowing us to put more of the right product into the stores, and replenish basic and seasonal goods in a timely manner. Lower markdowns, improved shrink, and better inventory management are tangible benefits that we saw this quarter."
Gross margin was 35.4%, equal to last year's first quarter. Increased purchases of lower-margin domestic goods and loss of leverage on fixed occupancy costs were offset by improvements in shrink and markdowns, the company said.
Dollar Tree reaffirmed that it expects sales for the second quarter to be $700 million to $715 million, based on square-footage growth of about 20% and comparable-store sales growth of flat-to-slightly positive.
For the full year, the company estimates sales of $3.2 billion to $3.3 billion, based on square-footage growth of about 20% and comparable-store sales growth of slightly positive to 3%. The company continues to expect earnings growth of at least 14% from a year ago, when it earned $177.6 million, or $1.54 a share.