* 3rd-qtr adj. profit $0.81/shr vs. est. $0.78
* Family Dollar acquisition paying dividends - analyst
* Shares jump as much as 11.5 pct
(Adds analyst comment)
By Sruthi Ramakrishnan
Nov 22 Dollar Tree Inc, the biggest
U.S. dollar-store chain after its acquisition of Family Dollar
in 2015, reported a better-than-expected quarterly profit,
benefiting from improved economies of scale and a more efficient
Shares of the company, whose same-store sales also beat
expectations, jumped as much as 11.5 percent on Tuesday.
Dollar-stores such as Dollar Tree and Dollar General Corp
have been expanding aggressively in recent years, taking
market share from Wal-Mart Stores Inc and other
retailers, thanks to their smaller store sizes, improving
product assortment and prices starting at $1.00.
Wal-Mart has been fighting back, however, spending heavily
to better stock its shelves and cutting prices on food.
"We believe that these results demonstrate the Family Dollar
acquisition is paying dividends and remains firmly on course in
terms of the savings and benefits Dollar Tree promised
investors," Neil Saunders, chief executive of research firm
Conlumino, said in an email.
Costs were helped by the elimination of less-profitable
lines at Family Dollar, as well as by lower fuel prices and a
rationalization of delivery routes, Saunders said.
Dollar Tree completed its $8.5 billion acquisition of Family
Dollar in July last year, meaning the latest quarter was the
first in which there was a true year-on-year comparison of the
combined company's performance.
Chief Executive Bob Sasser, speaking to analysts on a
conference call, said he believed Dollar Tree would surpass its
target of synergies of $300 million in the three years after the
closing of the Family Dollar deal.
Dollar Tree has been refurbishing many Family Dollar stores
and improving their product assortments and customer service
while re-badging some as Dollar Tree outlets. Family Dollar
customers tend to have lower incomes than Dollar Tree customers.
While Family Dollar's sales fell 5.2 percent to $2.53
billion in the third quarter ended Oct. 29, gross profit
increased 5.6 percent to $663.2 million.
Dollar Tree's sales at stores open more than a year rose 1.7
percent in constant-currency terms, beating the 1.4 percent rise
expected by analysts polled by researcher Consensus Metrix.
Chesapeake, Virginia-based Dollar Tree's net income more
than doubled to $171.6 million, or 72 cents per share. The prior
year included charges related to Family Dollar.
Excluding items, the company earned 81 cents per share,
beating the average analysts' estimate of 78 cents, according to
Thomson Reuters I/B/E/S. Net sales rose 1.1 percent to $5.00
billion, shy of the average estimate of $5.07 billion.
Up to Monday's close, Dollar Tree's shares had risen 6.2
percent since the start of the year. The stock was up 9.4
percent at $89.92 in early afternoon trading.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Anil
D'Silva and Ted Kerr)