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Dollar Tree (DLTR) Gains After Upbeat 3Q Earnings, Lifts 2012 Profit View

 November 15, 2012 09:10 AM

(By Balaseshan) Dollar Tree Inc. (NASDAQ: DLTR) shares gained 4.34% in premarket on Thursday after posting upbeat quarterly earnings and the operator of discount variety stores raised full-year guidance above market expectations.

Earnings for the third quarter were $155.4 million or $0.68 per share, up from $104.5 million or $0.43 per share last year. Excluding one-time gain relating to sale of its ownership interest in Ollie's Holdings Inc., earnings per share were $0.51 for the latest quarter.

Sales grew 7.8% to $1.72 billion. Comparable store sales increased 1.6% for the latest quarter.

Analysts, on average, polled by Thomson Reuters had expected a profit of $0.49 per share on revenue of $1.73 billion for the third quarter.

[Related -Family Dollar Stores, Inc. (NYSE:FDO) Q1 Earnings Preview: What To Watch?]

Operating margin increased 40 basis points for the quarter to 10.7%.

During the third quarter, Dollar Tree opened 111 stores, expanded or relocated 16 stores, and closed 4 stores. Retail selling square footage increased 7.1% to 40.1 million square feet.

Looking ahead into the fourth quarter, the company expects earnings of $0.97 to $1.02 per share and sales of $2.20 billion to $2.26 billion, while Street analysts predict profit of $0.98 per share on revenue of $2.24 billion. The forecast also assumes flat- to- a low-single digit positive comparable store sales.

For the full year, the company now expects earnings of $2.65 to $2.70 per share and sales of $7.35 billion to $7.41 billion, while Street analysts predict profit of $2.48 per share on revenue of $7.39 billion.

[Related -Dollar Tree, Inc. (DLTR): Healthy Cash Flow, Superior Returns Should Allay Investor Concerns]

Previously, the company had guided profit of $2.45 to $2.54 per share and sales of $7.36 billion to $7.45 billion for the fiscal 2012.

In addition, 2012 will include a 53rd week that will be recorded in the fourth quarter 2012. The extra week is expected to add $120 million to $130 million to sales in the fourth quarter 2012 and $0.07 to $0.08 earnings per share, both of which are included in guidance.

DLTR closed Wednesday's regular session at $37.76. The stock has been trading between $36.04 and $56.81 for the past 52 weeks.

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