Dollar Tree, which acquired Family Dollar last year to become the biggest dollar store chain in the U.S., reported better-than-expected quarterly earnings and lifted its guidance on Tuesday.
The news sent shares of Dollar Tree, which have risen 4% this year, up 9% to $89.50 in pre-market trading.
The discount store chain said that during the third quarter, net income rose to $171.6 million, or 72 cents per share, compared to $81.9 million, or 35 cents per share, a year earlier. Excluding items, the company earned 81 cents per share, which beat the 78 cents that Wall Street analysts were looking for.
Total sales climbed 1.1% to $5 billion, just missing analyst estimates of $5.08 billion. Sales at existing stores increased a better-than-expected 1.7%, however, driven by a rise in the number of Dollar Tree customers and the average amount they spent at the store.
Dollar Tree has seen "continued meaningful progress in our integration of Family Dollar," noted CEO Bob Sasser in prepared remarks. "The stores are cleaner, the values are greater and our customer feedback scores regarding merchandise assortments and in-stocks have improved," he added.
In a sign of its optimism, the company lifted its guidance for the fourth quarter. It's now expecting earnings of $1.24 to $1.33 per share, up from its previous estimates of $1.21 to $1.30 per share.
