NEW YORK, NY / ACCESSWIRE / August 31, 2018 / While Dollar Tree reported solid second quarter results, it was its outlook for the full year that sent shares lower on Thursday. Shares of Abercrombie and Fitch also went into the red after reporting its own second quarter report.
RDI Initiates Coverage on:
Dollar Tree, Inc.
Abercrombie & Fitch Co.
Dollar Tree, Inc. shares were down 15.54% yesterday at the close after reporting second quarter results. While results were good, the company scaling back its outlook had traders on edge. The company has lowered revenue and earnings estimates for the full year. Fiscal 2018 revenue is now expected to land between $22.75 billion and $22.97 billion, against a previous range of $22.73 billion to $23.05 billion. EPS for full year is now expected to range between $4.85 and $5.05 compared to the previously expected range of $4.80 to $5.10. CEO Gary M. Philbin said on the earnings call about the second quarter, "Sales increased 4.6% to $5.53 billion. Our consolidated same-store sales increased 1.8%. By segment, our comp sales for Dollar Tree banner increased 3.7%, and the Family Dollar banner's comps were flat compared to last year's Q2 increase of 1%... Our enterprise gross margin rate declined 70 basis points to 30.1%. Operating income was $382.5 million or 6.9%. And diluted earnings per share increased 17.3% to $1.15, $0.01 below the high end of our guidance range. In mid-July, our company hit a milestone by opening our 15,000th store. We celebrated the occasion with exciting offers and promotions at both Dollar Tree and Family Dollar stores, along with coordinated grand opening celebrations at select stores across the country."
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Abercrombie & Fitch Co. shares closed down 17.16% on Thursday with almost 14.5 million shares traded. The company saw its shares drop as second quarter sales came in short of what was expected. The teen clothing retailer based in Ohio reported a loss of $3.9 million for the quarter, or a loss of 6 cents a share. In the year ago period losses were $15.5 million or a loss of 23 cents a share. Adjusted earnings came to be 6 cents a share. Analysts on average were expecting a loss of 5 cents a share. Revenue for the period was $842.4 million while analysts had been expecting $847.1 million. Jefferies analyst Janine Stichter wrote in a note, "Investors will not be willing to give (Abercrombie) a pass on weather." It was earlier in the week that rival American Eagle Outfitters reported better-than expected second-quarter profit and sales. CEO Fran Horowitz was optimistic and said during the earnings call, "Supported by strong progress against these initiatives, our second-quarter performance reinforces the confidence we have in our ability to achieve the 2020 targets we set at our Investor Day earlier this year, including a low single-digit sales CAGR with modest gross margin expansion and doubling of our 2017 adjusted EBIT margins by 2020."
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