FX.co ★ Dollar Tree Q3 Beats Market, Updates FY24 View, CFO To Resign; Stock Up

Dollar Tree, Inc.'s shares observed a near 5 percent rise in pre-market trading on Nasdaq, following the announcement of its stronger-than-expected third-quarter results on Wednesday. The discount retail chain also offered an outlook for the upcoming fourth quarter and revised its fiscal 2024 forecast.

Additionally, Dollar Tree disclosed that Chief Financial Officer Jeff Davis has agreed to step down. An external search for his replacement is underway, although Davis will stay on until the company files its fiscal 2024 Form 10-K.

Regarding the strategic review of its Family Dollar business segment, the company stated that the process is advancing as scheduled. The strategic alternatives under consideration may include a potential sale, spin-off, or other restructuring, though no specific timeline or deadline has been established for this review.

Interim CEO Mike Creedon remarked, "Our efforts at Dollar Tree and Family Dollar have delivered concrete results, with third-quarter sales reaching the upper end of our expectations. We remain focused on accelerating the growth of the Dollar Tree segment and concluding the Family Dollar strategic review."

For the fourth quarter, Dollar Tree forecasts adjusted earnings per share (EPS) to range between $2.10 and $2.30 and consolidated net sales between $8.1 billion and $8.3 billion. According to Thomson Reuters, analysts anticipate earnings of $2.23 per share on sales of $8.24 billion, typically excluding exceptional items.

Projected comparable store net sales growth for the quarter is expected to be in the low-single digits for both the entire enterprise and the Dollar Tree and Family Dollar segments.

For fiscal 2024, Dollar Tree now estimates adjusted EPS between $5.31 and $5.51, a slight adjustment from its previous forecast of $5.20 to $5.60. Consolidated net sales are projected to be between $30.7 billion and $30.9 billion, compared to the prior estimate of $30.6 billion to $30.9 billion.

The company projects continued low-single-digit growth in comparable store net sales across the enterprise and within the Dollar Tree and Family Dollar divisions. Analysts are predicting earnings of $5.41 per share on sales of $30.71 billion for the year.

In the third quarter, Dollar Tree's earnings surpassed both last year's figures and market expectations. The company reported earnings of $233.3 million, or $1.08 per share, up from $212.0 million, or $0.97 per share, in the same quarter last year. Adjusted earnings were $240.6 million, or $1.12 per share, exceeding analysts’ predictions of $1.08 per share.

Revenue for the quarter climbed by 3.5 percent to $7.568 billion, compared to $7.314 billion the previous year, surpassing the Street’s forecast of $7.44 billion.

During the same period, same-store net sales increased by 1.8 percent for Dollar Tree, 1.9 percent for Family Dollar, and 1.8 percent for the overarching Enterprise.

As the market opened, Dollar Tree shares were trading at approximately $76.05, reflecting a 4.9 percent increase.