Dollar Tree Inc (NASDAQ:DLTR) stock fell 2.62% (As on September 4, 11:17:31 AM UTC-4, Source: Google Finance) after the company provided a downbeat outlook for the current quarter, despite reporting a big profit beat for the fiscal second-quarter and raising its full-year outlook. For the quarter to Aug. 2, Dollar Tree said net income rose 42.3% from the same period a year ago to $188.4 million. Comparable-store sales, or sales of stores open at least 15 months, were up 6.5% to beat the FactSet consensus of a 5.4% rise, as traffic increased 3% and the value of the average ticket rose 3.4%. In July, Dollar Tree completed the sale of its Family Dollar business to Brigade Capital Management and Macellum Capital Management.
Moreover, the company has opened 106 new Dollar Tree stores and converted approximately 585 stores to our 3.0 multi-price format. Year to date, the company has generated $639 million of net cash provided by operating activities from continuing operations and $145 million of free cash flow from continuing operations. Adjusted operating income increased 7.4% to $236.0 million and adjusted operating margin contracted 20 basis points to 5.2%.
DLTR in the second quarter of FY 25 has reported the adjusted earnings per share of 77 cents, beating the analysts’ estimates for the adjusted earnings per share of 42 cents, according to FactSet. The company had reported the adjusted revenue growth of 12.3 percent to $4.57 billion in the second quarter of FY 25, beating the analysts’ estimates for revenue of $4.48 billion. Gross profit increased 12.9% to $1.6 billion and gross margin expanded 20 basis points to 34.4%. The expansion in gross margin was driven primarily by improved mark-on from pricing initiatives, lower domestic freight costs, lower occupancy costs due to sales leverage, and favorable mix, partially offset by higher tariff costs, markdowns, distribution costs, and shrink.
For the current third quarter, adjusted EPS is expected to be similar to that of a year ago, while the current FactSet EPS consensus of $1.33 implies 18.8% growth.
For the full fiscal year, the company raised its guidance for adjusted EPS to a range of $5.32 to $5.72 from a range of $5.15 to $5.65. The company also lifted its guidance for full-year net sales toa range of $19.3 billion to $19.5 billion from a range of $18.5 billion to $19.1 billion, and for comparable-store sales growth to a range of 4% to 6% from a range of 3% to 5%.