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Key Takeaways From Dollar Tree's 3rd-Quarter Results

Dollar Tree Inc. (NASDAQ:DLTR) released its third-quarter results before the market opened on Nov. 26. The company posted disappointing earnings, while revenue narrowly beat estimates.

Snapshot of the quarter

The discount retailer recorded earnings of $1.08 per share on revenue of $5.75 billion. Analysts had anticipated earnings of $1.13 per share on $5.74 billion in revenue. Comparable store sales jumped 2.5%, which met projections.

In a statement, CEO Gary Philbin commented on the company's performance:

"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. 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."

At quarter-end, the company had cash and cash equivalents of $433.7 million. Long-term debt barring current maturities was $3.5 billion.

Impact of tariffs

Dollar Tree's results were hurt by the ongoing U.S.-China trade war.

Looking ahead to the fourth quarter, the company expects its cost of goods to go up by $19 million (or 6 cents per share) on account of the heavy import taxes on Chinese products.

Store details

During the quarter, the company launched 165 new outlets, modernized or repositioned 15 stores and closed 30 Family Dollar and 12 Dollar Tree stores. The retailer now operates 15,262 stores in 48 states and five Canadian provinces.

Financial forecast

Dollar Tree also provided guidance for full fiscal 2019.

The company expects consolidated net sales to be between $23.62 billion and $23.74 billion, as compared with its previously forecasted range of $23.57 billion to $23.79 billion. Diluted earnings per share are projected to be in the range of $4.66 to $4.76.

Disclosure: I do not hold any positions in the stocks mentioned.

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This article first appeared on GuruFocus.