Dollar Tree's 4Q profit falls on lower sales

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RICHMOND, Va. (AP) — Dollar Tree Inc. said Wednesday that its fourth-quarter net income fell nearly 7 percent as severe weather and a shorter holiday selling period hurt the discount retailer's sales.

Its results for the quarter and its forecast for full year 2014 fell short of Wall Street expectations.

The Chesapeake, Va., company earned $213 million, or $1.02 per share, for the period ended Feb. 1. That's down from $228.6 million, or $1.01 per share, in the year-ago period that included an extra week.

Analysts polled by FactSet expected earnings of $1.05 per share.

Revenue fell less than one percent to $2.23 billion. Analysts expected revenue of $2.28 billion.

Sales at established stores rose more than a percent. That comparison is a key gauge of a retailer's health. It excludes the volatility associated with stores that recently opened or closed.

"It was a challenging quarter best characterized as a short selling season, and persistently bad weather," CEO Bob Sasser said in a conference call with investors. "We had a great plan that was well executed. When the stores were open and customers could shop, our results were more accurately reflective of the underlying strength of our business."

The top-performing categories during the quarter included products at the checkout counter, frozen and refrigerated products, stationary, candy and party supplies.

Dollar stores offer a wide variety of products, from beach toys to vitamins. They have done well throughout the recession and its aftermath, attracting budget-conscious customers. They've also promoted themselves as easy to navigate and get to, because they're much smaller than big-box stores like Wal-Mart and Target, and often have more locations in cities.

For the full year, the company said its profit fell more than 3 percent to $596.7 million, or $2.72 per share, from $619.3 million, or $2.68 per share, a year ago. Revenue rose to $7.84 billion from $7.39 billion a year earlier. Same store sales rose 2.4 percent.

Dollar Tree expects a full-year 2014 profit of $2.91 to $3.13 per share on revenue between $8.35 billion and $8.58 billion. Analysts expect earnings of $3.25 on revenue of $8.59 billion.

It plans to open 375 new stores during the current fiscal year.

Dollar Tree operates more than 4,990 stores in the U.S. and Canada.

Despite missing Wall Street expectations, its shares rose $3.37, or 6.4 percent, to $56.06 in midday trading.

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Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum .

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