Dollar Tree (NASDAQ: DLTR) reported Q3 EPS of $1.08, $0.05 worse than the analyst estimate of $1.13. Revenue for the quarter came in at $5.75 billion versus the consensus estimate of $5.74 billion.

• Consolidated Net Sales Increased 3.7% to $5.75 Billion
• Earnings per Diluted Share of $1.08 vs. Guidance Range of $1.07 to $1.16
• Enterprise Same-Store Sales Increased 2.5%
• Same-Store Sales by Segment: Dollar Tree +2.8%, Family Dollar +2.3%
• Planning for 1,000+ Fiscal 2020 Family Dollar H2 Renovation Projects

“The third quarter represented another period of solid sales performance for both brands, Dollar Tree and Family Dollar. Our store optimization efforts and sales driving initiatives are working. The teams have completed more than 1,150 Family Dollar H2 renovations, nearly 200 Dollar Tree re-banners, more than 1,000 Dollar Tree Snack Zones and launched our Dollar Tree Plus! test already this year,” stated Gary Philbin, President and Chief Executive Officer. “Fiscal 2019 has been a unique year as the result of several factors: the material acceleration in our Family Dollar store optimization initiatives, the consolidation of our two store support centers into southeast Virginia, the global helium shortage, and the continued uncertainty regarding trade and the related tariffs. I am proud of our team’s efforts and the sales execution through this environment.”

GUIDANCE:

Dollar Tree sees Q4 2019 EPS of $1.70-$1.80, versus the consensus of $2.02. Dollar Tree sees Q4 2019 revenue of $6.33-6.44 billion, versus the consensus of $6.41 billion.

Dollar Tree sees FY2019 EPS of $4.66-$4.76, versus the consensus of $5.05. Dollar Tree sees FY2019 revenue of $23.62-23.74 billion, versus the consensus of $23.74 billion.

Just prior to the Company’s previous quarterly earnings announcement on August 29, 2019, the United States Trade Representative (USTR) announced that tariffs on List 1, 2, and 3 products would increase from 25% to 30% on October 1, 2019, tariffs on List 4A products would increase from 10% to 15% on September 1, 2019, and tariffs on List 4B products would increase from 10% to 15% on December 15, 2019. As noted in its August 29, 2019 earnings announcement, the outlook provided at that time did not include any impact related to these changes.

The Company now estimates that Section 301 tariffs will increase its cost of goods sold by approximately $19 million, or $0.06 per diluted share, in the fourth quarter of 2019 if tariffs are fully implemented.

The Company estimates consolidated net sales for the fourth quarter of 2019 will range from $6.33 billion to $6.44 billion, based on a low single-digit increase in same-store sales for the enterprise. Diluted earnings per share for the quarter, including tariff costs, are estimated to be in the range of $1.70 to $1.80.

The decrease from prior implied fourth quarter guidance represents the expected effects of: Section 301 tariffs; additional pressure on merchandise margin based on lower-margin consumables growing faster than originally forecasted; payroll cost pressure in distribution centers; and increased run rates for repairs and maintenance, utilities and depreciation.

Consolidated net sales for full-year fiscal 2019 are now expected to range from $23.62 billion to $23.74 billion compared to the Company’s previously expected range of $23.57 billion to $23.79 billion. This estimate is based on a low single-digit increase in same-store sales and 1.1% selling square footage growth. The Company now anticipates diluted earnings per share for full-year fiscal 2019 will range between $4.66 and $4.76. This includes discrete costs of approximately $85 million, or $0.28 per diluted share, approximately $15 million, or $0.05 per diluted share, in store closure related costs, and approximately $19 million, or $0.06 per diluted share, from tariffs.

“The value and convenience offered by Dollar Tree and Family Dollar continue to resonate with our shoppers, as demonstrated by the Company’s sales performance in the first three quarters of fiscal 2019,” Philbin added. “With several critical initiatives now behind us, including the acceleration in store optimization initiatives and the consolidation of our store support centers, we are planning for more than 1,000 Family Dollar H2 renovations for fiscal 2020 and are increasing our focus on operating margin performance. Our teams are well prepared for the holiday season and closing out an important year for our Company. We believe we have built a strong foundation to enhance our ability to grow and improve our business to deliver long-term value to our shareholders.”

For earnings history and earnings-related data on Dollar Tree (DLTR) click here.