Dollar Tree reported better-than-expected quarterly profit and comparable sales, helped by lower costs and discounts as well as a 1 percent rise in same-store sales at its Family Dollar business.
Shares of the biggest U.S. dollar-store chain operator rose 9 percent to $81.04 in premarket trading on Thursday after the company raised its profit and sales forecasts for fiscal 2017 ending January.
Shares of rival Dollar General were also up 3.5 percent at $79.
The 1 percent rise in sales at Family Dollar Stores in the second quarter came in above the 0.6 percent rise expected by analysts.
Family Dollar, which Dollar Tree bought in 2015, had reported a surprise drop in sales in the first quarter as late tax refunds had led low-income customers to rein in spending at the discount chain’s stores.
While a price war among big retailers such as Wal-Mart Stores and Kroger sent prices of groceries and household essentials plunging, Dollar Tree and Dollar General have been largely unscathed, thanks to their smaller store sizes, a wider variety of products and prices starting at $1.
Sales at Dollar Tree’s stores open more than 12 months rose 2.4 percent, above the 1.6 percent growth expected by analysts polled by research firm Consensus Metrix.
Net income rose to $233.8 million, or 98 cents per share, in the second quarter ended July 29, from $170.2 million, or 72 cents per share, a year earlier.
Excluding items, the company earned 99 cents per share, handily beating the average analyst estimate of 87 cents per share, according to Thomson Reuters I/B/E/S.
Net sales rose 5.7 percent to $5.28 billion, coming in above the $5.24 billion expected by analysts.
The company said it now expects full-year net sales to be in the range of $22.07 billion and $22.28 billion, compared to its previous forecast of $21.95 billion to $22.25 billion.
Dollar Tree also said it now expects full-year profit to be between $4.44 and $4.60 per share, up from its previous forecast of $4.17 to $4.43 per share.