Dollar Tree tops estimates but guidance muted by tariffs

Dollar Tree Inc. shares rose 1.8% in premarket trade Wednesday, after the company beat estimates for the fourth quarter but offered a mixed outlook as it grapples with trade tariffs. The company said it had a net loss of $2.31 billion, or $9.66 a share, in the fourth quarter, after earnings of $691.5 million, or $4.37 a share, in the year-earlier period. The loss was mostly due to a $2.73 billion non-cash goodwill impairment charge related to the acquisition of Family Dollar in 2015. Adjusted per-share earnings came to $1.93, a penny ahead of the FactSet consensus of $1.92. Sales fell to $6.21 billion from $6.36 billion, but beat the $6.19 billion FactSet consensus. Same-store sales rose 2.4%, ahead of the 1.4% FactSet consensus. “We moved aggressively in the fourth quarter to optimize Family Dollar’s performance, including closing 84 stores and announcing plans to renovate at least 1,000 stores in 2019,” CEO Gary Philbin said in a statement. “The renovated stores will include new $1.00 Dollar Tree merchandise sections.” The company is now expecting first-quarter EPS of $1.05 to $1.15 on sales of $5.74 billion to $5.85 billion. The FactSet consensus is for EPS of $1.30 and sales of $5.81 billion. For fiscal 2019, the company is expecting EPS of $4.85 to $5.25 on sales of $23.45 billion to $23.87 billion. The FactSet consensus is for EPS of $5.78 on sales of $23.89 billion. “Our guidance is based on the expectation that Section 301 tariffs would move to 25% in March 2019,” said the statement. “If these tariffs do not move to 25%, we expect to see margin benefit in the second half of fiscal 2019.” Shares have fallen 8.5% in the last 12 months, while the S&P 500 has gained 2.3%.

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