(Reuters) -Dollar Tree’s third-quarter profit and sales beat market expectations on Wednesday as more customers shopped at its discount stores for inexpensive essentials including groceries.
Shares of the company, which have lost nearly half of their value so far this year, rose 3% before the bell as the dollar store raised the lower end of its annual forecasts, whose midpoint exceeded analysts’ estimates.
Dollar Tree also said CFO Jeff Davis will step down after roughly two years on the job, but will remain with the company until the end of fiscal 2024.
Davis’ departure is yet another high-profile exit from the dollar store that comes just weeks after its CEO Rick Dreiling resigned.
Discount retailers such as Dollar Tree and peer Dollar General have been losing market share in a race with big players including Walmart, Target and PDD Holding’s e-commerce platform Temu as they keep prices low to attract cost-conscious consumers.
Analysts have raised doubts that the lack of a permanent leadership at Dollar Tree could impact key business decisions for the crucial holiday season as well as early 2025.
The company, meanwhile, has benefited from increased traffic to its stores as well as shoppers buying more per trip on average. Store traffic rose 1.6% in the quarter, with growth in both Dollar Tree and Family Dollar banners.
Its quarterly gross margin expanded 120 basis points to 30.9% partly due to lower freight costs.
Dollar Tree’s net sales of $7.56 billion compared with analysts’ average estimate of $7.44 billion. It posted adjusted earnings per share of $1.12, compared with expectations of $1.07, according to data compiled by LSEG.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Arun Koyyur)
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