Dollar Tree, Inc. (NASDAQ:DLTR), the largest dollar-store chain in the U.S., released its third-quarter results on Tuesday.
The company saw more traffic and more dollars spent at its stores with same-store sales up 5.2% year-over-year, above analyst expectations of 3.2%. In total, net sales were up 6.3% from a year ago and revenues of $5.32 billion came in higher than estimates of $5.28 billion. Earnings per share of $1.01 were well above last year’s $0.72 and above Q3 expectations of just $0.90.
Dollar Tree had a strong quarter overall and in trading on Tuesday saw its share price reach over $100 and create a new 52-week high, before giving back some of those gains.
Dollar Tree’s stock is trading at all-time highs and although that might make some investors hesitant to invest, as expenses rise, and specifically as housing costs rise as a result of interest rate increases, discount retailers like Dollar Tree might become attractive substitutes for shoppers that are looking to save money.
Dollar stores like Dollar Tree have an advantage over conventional retailers because their stock can vary and the store can choose to buy just what is the cheapest option rather than worrying about carrying a certain brand. Focusing strictly on cost helps Dollar Tree to grow its bottom line, sometimes faster than its top line.
In its last fiscal year, sales for Dollar Tree rose 34% while operating income increased by 62%. Over the long term, Dollar Tree presents investors with a great investment that can succeed at a time when other retailers are struggling.
