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Dollar Tree scores missed expectations hat trick


Dollars Tree’s first quarter sales were less than expected, it is divesting more of the acquired Family Dollar stores than expected and closing the merger is taking longer than expected.

Dollar Tree's missed expectations hat trick - a reference to a rarefeat in hockey when one player scores three goals in a single game - came during the release of financial resultsfor the company'sfirstquarter ended May 2. Salesincreased 8.8% to $2.18 billion due to the combination of a currency adjusted same store sales increase of 3.1% and the addition of 93 new stores. Sales would have been stronger but Dollar Tree said congestion at West coast ports following a strike delayed the receipt of merchandise at four of its 10 distribution centers.

“Comparable store sales grew as the result of increases in both traffic and average ticket. Customers are shopping with us more often and they are buying more on each visit,” said Dollar Tree CEO Bob Sasser. “Our performance continues to validate that Dollar Tree is part of the solution for millions of customers seeking great values for their hard-earned dollars. Despite challenges presented by delayed receipts of merchandise related to the west coast port congestion and the impact of the holiday calendar shift, our team worked together to deliver solid sales and earnings, both of which were well within our guidance range. We entered the second quarter with fresh inventory, stocked shelves, and greater values than ever for our customers.”

Net income, compared to the prior year's first quarter grew slowly even when non-recurring acquisition related costs are excluded. Net income on an adjusted basis increased 5.8% to $146.3 million, or 71 cents a share, below analyst’s expectations for earnings of 75 cents a share.

Other areas where Dollar Tree came up short relative to expectations it had earlier created for itself related to store divestitures and the closing date of its acquisition of Family Dollar. The company now plans to divest approximately 330 stores after indicating in prior presentations to investors that the Federal Trade Commission would likely be satisfied with 300 or fewer divestitures.

“The Company intends to reach an agreement with a divestiture buyer in the coming days and secure FTC clearance thereafter. The Company intends to close the proposed merger in early July 2015,” Dollar Tree said in a statement.

Dollar Tree had previously told investors it expected to reach a divestiture deal with the FTC I in early March and expected the deal to close by late April.

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