Back on Aug. 25, Dollar Tree reported a somewhat disappointing quarter. Second-quarter earnings of 72 cents per share were a penny worse than the consensus estimate. Revenue rose 66% to $5 billion, vs. the $5.08 billion estimate. The increase in revenue was due to the acquisition of Family Dollar Stores.
Management forecast third-quarter earnings of 76 cents to 82 cents per share, vs. an analyst estimate of 77 cents and revenue between $5.02 to $5.1 billion.
For the full year, management provided a mix picture. The company raised earnings guidance but lowered revenue guidance. Management is now forecasting earnings of $3.74 per share and revenue of $20.78 billion.
Same-store sales increased 1.2% vs. 2.7% in the same period last year. The increase was driven by increased traffic and a slightly higher average ticket. The company opened a total of 99 net new stores. Selling square footage increased 10.4%, and the company ended the quarter with 6,184 Dollar Tree stores. The company remains on track to open 200 new Family Dollar stores in 2016.
In my opinion, the selloff in the stock seems overdone.