The more unemployed the Americans (10.2%!), the better dollar stores are going to do. So it should come as no surprise that Dollar Tree Inc. (DLTR) posted better than expected quarterly sales:
Deutsche Bank: DLTR reported 3Q09 sales of $1.25b as compared to our estimate of $1.21b and guidance of $1.19b – $1.23b. Consensus was $1.22b. Same-store sales increased 6.5% on top of a 6.2% increase in 3Q08, and compares to guidance of comps in the low to mid single digits. HBC and household consumables continued to lead the way, though DLTR also noted party supplies a better-performing category. Perhaps the most significant news was the “terrific” seasonal performance of both BTS and Halloween. We believe this is a positive indicator for the 3Q09 margins.
Dollar Tree isn’t the only store posting gains. 99 Cents Only (NDN) also killed it last quarter:
NDN reported solid 2Q10 results of $0.14 as compared to our estimate of $0.06 and the Street consensus of $0.08. Results from the Texas stores were also improved, and helped to drive the upside in the quarter. NDN also issued a more favourable outlook for 2H10 and going forward. We had been forecasting better- than-guided near term results for 2H10 and FY11, however, and are making only minor adjustments to our model. As such, we maintain our Hold rating and $14 PT.