Dollar Tree (DLTR) Q4 profit beats estimates but guides Q1 below consensus

Dollar Tree Inc. (NASDAQ: DLTR) swung to a profit in the fourth quarter of 2019 from a loss last year, driven by lower costs and expenses. The bottom line exceeded analysts’ expectations while the top line missed forecast. Further, the company guided earnings and revenue for the first quarter and full-year 2020 below the consensus view.

Net income was $123 million or $0.52 per share compared to a loss of $2.3 billion or $9.69 per share in the previous year quarter. Adjusted earnings fell by 6% to $1.79 per share. Net sales rose by 2% to $6.32 billion. Analysts had expected EPS of $1.75 on revenue of $6.39 billion for the fourth quarter.

Looking ahead into the first quarter of 2020, the company expects net sales in the range of $5.89-5.99 billion and earnings including tariff costs to be in the range of $1.00-1.09 per share. Analysts expect EPS of $1.20 on revenue of $6.03 billion for the first quarter. The forecast is based on a low-single-digit increase in same-store sales for the enterprise.

For fiscal 2020, the company sees net sales in the range of $24.21-24.66 billion and earnings in the range of $4.80-5.15 per share. The consensus estimates EPS of $5.29 on revenue of $24.76 billion for the full year. The estimate is based on a low single-digit increase in same-store sales and 3.1% selling square footage growth.

The company’s outlook includes an estimated incremental impact of $47 million related to tariffs, with nearly all of it being incurred in the first half of the year. Additionally, the outlook includes an estimated impact of $15 million related to the new clean fuel regulations for ocean shipping. The outlook does not include any potential impact related to the supply chain or other aspects of the company’s business for the COVID-19 coronavirus.

For the fourth quarter, same-store sales at enterprise increased by 0.4%. Same-store sales for the Dollar Tree segment increased by 1.4% on a constant currency basis. Same-store sales for the Family Dollar segment declined by 0.8%.

Read: Kohl’s Q4 earnings review

Despite the compressed holiday shopping season, the company delivered positive comps for the enterprise while managing margins and costs effectively to achieve adjusted EPS near the top of its forecast range.

During the quarter, the company opened 112 new stores, expanded or relocated 17 stores, and closed 95 stores. Additionally, the company opened 10 Dollar Tree stores that were re-bannered from Family Dollar and completed five renovations to the Family Dollar H2 format. Retail selling square footage at quarter-end was about 121.3 million square feet.

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