Dollar Tree's bucks add up to $488.3M profit in 2011

CHESAPEAKE

Dollar Tree Inc. surpassed analysts' expectations for its 2011 fourth quarter, announcing Wednesday a 15.6 percent increase in profit as a surge of shoppers boosted sales.

The everything-for-$1 retailer, with headquarters on Volvo Parkway, tallied earnings for the quarter that ended Jan. 28 of $187.9 million, or $1.60 per share, up from $162.5 million a year earlier. Annual earnings jumped 22.9 percent to $488.3 million, or $4.03 per share.

In a Thomson Reuters poll, 24 analysts estimated Dollar Tree earnings would average $1.59 per share for the quarter and $4.02 for the year.

Dollar Tree's sales were $1.95 billion for the quarter, up 12.7 percent from the same period a year earlier. Sales in comparable stores - or those open at least 12 months - jumped 7.3 percent. It was the largest quarterly comparable-store sales increase since 1999, CEO Bob Sasser told analysts Wednesday morning during a discussion of results.

For the year, Dollar Tree had sales of $6.63 billion, a 12.8 increase from $5.88 billion in 2010. Comparable-store sales for 2011 rose 6 percent.

An increase in store traffic drove the sales figures, Sasser said, with help from mild winter weather.

"The success of Dollar Tree, as it has always been, is based on our focus on the customer," he said. "We aim our efforts at increasing the value of the merchandise for a dollar, improving the quality of our shopping environment and providing the infrastructure that supports the business."

In the next three months, Dollar Tree expects to complete negotiations on a new warehouse to serve the Northeast, Sasser said.

Dollar Tree's stock price closed Wednesday at $87.36, down 65 cents.

For the 2012 first quarter, Dollar Tree forecast sales would be between $1.65 billion and $1.69 billion. Analysts polled by Thomson Reuters estimated $1.7 billion.

Kevin Wampler, the retailer's chief financial officer, noted the uncertainty of shipping costs this year. New ocean freight rates will take effect May 1, and diesel fuel prices, which in 2011 averaged more than 62 cents per gallon above the previous year, remain in question.

The company's projections also accounted for Easter falling two weeks earlier than in 2011, which shortens the company's seasonal selling time and could cut sales by a potential $8 million, Wampler said.

The retailer added 278 new stores in 2011. More than half its 4,351 stores contain cold cases to carry perishable foods and beverages. Those items and other groceries drove the comparable-store increases and account for 50 percent of Dollar Tree's business, Sasser said.

"It's still pretty tough out there," he said. "Unemployment's still high. We sell things people need every day, and it's only a dollar."