Raking in the Dough, One Dollar at a Time…

Not everyone is complaining about retail numbers. While this current economic situation has left a number of businesses and financial entities in a bit of a struggle, some companies are flourishing.  One such company is Dollar Tree, who did quite well in the last quarter. The story from the Wall Street Journal…

 Dollar Tree Inc. (DLTR) reported Wednesday that its fiscal first-quarter profit jumped 39% on stronger sales, as the discount chain continued to buck the downturn faced by other retailers and raised its fiscal-year outlook and gave a strong second-quarter forecast.

Shares rose 1.4% premarket to $45 as the latest quarter’s profit also topped estimates.

The seller of everything-for-$1-or-less items now expects fiscal-year earnings of $2.75 to $2.90 a share on revenue of $5.05 billion to $5.15 billion. In February, it forecast earnings of $2.55 to $2.75 a share on revenue of $4.96 billion to $5.09 billion.

For the second quarter, Dollar Tree anticipates earnings of 47 cents to 51 cents a share on revenue of $1.17 billion to $1.2 billion, with same-store sales rising in the low to mid- single digits on a percentage basis. Analysts were looking for earnings of 46 cents a share on sales of $1.18 billion, according to Thomson Reuters.

The company has benefited as consumers keep a close eye on their budgets and trade down to discount stores for bargains – resulting in Dollar Tree’s gaining some high-income customers. In a sign of the changing shopping patterns, market-research firm Nielsen Co. said households making more than $100,000 a year increased their spending at dollar stores by 18% in the second half of 2008. By comparison, growth by low- and mid-income shoppers was 8% and 6%, respectively.

For the period ended May 2, Dollar Tree posted a profit of $60.4 million, or 66 cents a share, up from $43.6 million, or 48 cents a share, a year earlier. Dollar Tree’s February forecast was 49 cents to 54 cents.

Earlier this month, the company reported a 14% sales jump to $1.2 billion, beating the high end of its forecast by $40 million, as same-store sales rose 9.2%. Chief Executive Bob Sasser said then the company’s performance was “very strong from Valentine’s Day through Easter” as more consumers snapped up health and beauty care basics, household cleaning supplies, party goods and food.

Gross margin rose to 34.6% from 33.9% on the sales gains.

Dollar Tree continued to expand, increasing its retail selling square footage 6.5%. It has 3,667 stores.

JPMorgan Chase & Co. (JPM) analyst Charles Grom noted early this year that Dollar Tree was benefiting from its store locations as well as its inexpensive products. He said stores often co-locate with best-in-class retailers at strip malls, “making for an easy trade-down opportunity by capitalizing on a more resilient consumer base.”