FY18 guidance below expectations
DLTR reported a broadly in-line comp at the Dollar Tree banner, while company gross margins were also in-line, but the Family Dollar banner comp slowed sequentially and company operating margins were ~30bps below expectations. More important is the introduction of FY18 guidance. Although sales guidance bracketed consensus, the EPS range of $5.25 to $5.60 is significantly below the $6.17 consensus, with DLTR planning to reinvest $100m of the $250m tax reform benefit in wages, benefits and labour hours. This reinvestment plan is likely to weigh on the shares today.Dollar Tree is an operator of discount variety stores. The company's stores operate under the names of Dollar Tree, Family Dollar and Dollar Tree Canada. The company's segments are: Dollar Tree, which is the operator of discount variety stores providing merchandise at the fixed price point of $1.00; and Family Dollar, which operates general merchandise discount retail stores. The merchandise mix in the company's Dollar Tree stores consists of consumable merchandise, variety merchandise, and seasonal goods. The merchandise mix in the company's Family Dollar stores consists of consumable merchandise, home products, apparel and accessories merchandise, and seasonal and electronics merchandise.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.
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