RICHMOND, Va. (AP) — Discount retailer Dollar Tree Inc. said Thursday its net income increased nearly 26 percent in the second quarter as consumers spent more at its stores that sell goods for $1 or less, but its shares slipped as the results and its outlook fell short of Wall Street expectations.
Dollar stores, which offer a wide variety of products from beach toys to vitamins, have done well throughout the recession and its aftermath, attracting budget-conscious customers with low prices. They've also promoted themselves as easy to navigate and easy to get to, since they're much smaller than big-box stores like Wal-Mart Stores and Target, and usually have more locations throughout any given city.
The Chesapeake, Va.-based chain said it earned $119.2 million, or 51 cents per share, for the three months ended July 28, up from $94.9 million, or 39 cents per share, a year ago, topping analysts' expectations of 47 cents per share.
Net sales increased 10.5 percent to $1.7 billion from $1.54 billion a year ago. Analysts polled by FactSet expected revenue of $1.71 billion.
Sales at stores open at least one year rose 4.5 percent. That comparison is a key gauge of a retailer's health because it excludes stores that recently opened or closed.
The company operates more than 4,520 stores in the U.S. and Canada. It opened 77 stores, expanded or relocated 21, and closed five during the second quarter.
Dollar Tree also executed a two-for-one stock split during the quarter. The company had said the move would lower its share price and make the stock more attractive to investors, potentially broadening the company's shareholder base.
CEO Bob Sasser said Dollar Tee continues to deliver consistently strong sales and earnings, but the company said it expects to earn 47 to 51 cents per share on revenue between $1.71 billion and $1.75 billion in the third quarter, short of the 52 cents and $1.77 billion in sales expected by analysts.
Dollar Tree also said it expects 2012 net income between $2.45 and $2.54 per share, on revenue between $7.36 billion and $7.45 billion on low- to mid-single-digit sales growth at stores open at least a year.
Its shares fell $3.05, or 6.1 percent, to $46.95 in premarket trading Thursday.
Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum.