Dollar Tree Inc. (NASDAQ:DLTR) rallied ahead of the opening bell in the US today after the discount retail chain reported quarterly profit and sales that exceeded market expectations.
Net sales rose 5% to $5.64bn in the fourth quarter ended 28 January from $5.37bn the same period a year earlier, as the company’s stores attracted more customers who spent more on average.
Analysts on average expected revenue of $5.62bn, according to a poll by Thomson Reuters.
Earnings per share increased to $1.36 from 97c, beating forecasts of $1.32.
Sales at stores open for more than a year climbed 2.3% on a constant-currency basis, ahead of estimates for 2.1% growth.
Discounters such as Dollar Tree and Dollar General Corp have taken market share from bigger rivals like Wal-Mart Stores Inc. and Target Corp as customers prefer smaller stores, a variety of products and low prices starting at $1.00.
In an effort to claw back market share, Wal-Mart and Target have been cutting food prices. On Tuesday, Target said it will slash prices at the expense of margins to compete against dollar stores.
Shares in Dollar Tree rose 3.65% to $76.68 in US pre-market.