Dollar Tree, Inc. (Nasdaq: DLTR) stock plummeted 10 percent Thursday morning after first-quarter same-store sales came up short of market expectations. Dollar Tree joined other U.S. retailers in blaming bad weather for its low numbers, but analysts still like the stock in the longer term.
Dollar Tree reported adjusted earnings per share of $1.19, missing consensus analyst expectations of $1.23. Revenue for the quarter was $5.55 billion, slightly below consensus estimates of $5.57. Revenue was up 5 percent from a year ago.
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The biggest disappointment on the quarter was same-store sales growth of 1.4 percent, well short of analyst expectations of 2.2 percent. Dollar Tree locations reported 4 percent same-store sales growth, but Family Dollar same-store sales declined 1.1 percent in the quarter.
“Our teams worked hard to deliver top-line sales and bottom-line earnings results within our range of guidance, despite headwinds related to increasing freight costs, colder-than-normal spring weather in many parts of the country and an earlier Easter holiday,” CEO Gary Philbin says in a statement. “While weather impacted the discretionary side of our business in the first quarter, we have seen an acceleration in sales with warmer weather in May.”
Family Dollar opened 130 new stores in the first quarter, relocated 26 stores and closed five stores.
Looking ahead, Dollar Tree guided for second-quarter revenue of between $5.47 billion and $5.57 billion and EPS of between $1.07 and $1.16. The company also expects “low single-digit” same-store sales growth.
Dollar Tree also lowered its full-year EPS guidance from a previous range of between $5.25 and $5.60 to a new range of between $4.80 and $5.10. Dollar Tree now expected full-year revenue of between $22.73 billion and $23.05 billion compared to previous guidance of between $22.70 billion and $23.12 billion. The company guided for low single-digit same-store sales growth to continue throughout the year.
Despite the bump in the road, Bank of America analyst Robert Ohmes says both Dollar Tree and Family Dollar will be big winners in a strong market for discount retailers over the next decade.
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“An accelerating low income consumer should also support improving sales momentum at both banners thru 2018 and beyond, in our view,” Ohmes says.
Bank of America has a “buy” rating and $130 price target for DLTR stock.
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Dollar Tree, Inc. (DLTR) Blames Weather For Sales Miss originally appeared on usnews.com
