Dollar Tree, Wendy's Q4 Revenues Miss Estimates

(RTTNews) - Dollar Tree Inc. (DLTR) Wednesday reported a profit for the fourth-quarter that climbed 309 percent from last year, while Wendy's Co. (WEN) posted a profit that grew about 46.0 percent from the prior year. Dollar Tree has increased its share repurchase authorization by $2.0 billion. Wendy's expects profit for fiscal year 2021 to be below analysts' expectations.

Dollar Tree's earnings per share topped analysts' expectations, but quarterly sales missed their estimates. Wendy's quarterly adjusted earnings per share and revenue missed analysts' expectations.

Dollar Tree said it did not issue updated sales and earnings guidance at this time, due to expectation of continued volatility and uncertainty related to the COVID-19 pandemic and other macroeconomic factors.

For fiscal 2021, Dollar Tree plans to open 600 new stores and to renovate 1,250 Family Dollar stores. The new stores are expected to consist of 400 Dollar Tree stores and 200 Family Dollar stores. The new Family Dollar stores will be comprised of H2 and Combination Store formats, based upon market locations.

Looking ahead for fiscal year 2021, Wendy's expects adjusted earnings per share to be in the range of $0.67 to $0.69, global system wide sales growth of 6 to 8 percent, excluding the impact of the 53rd week. Analysts expect annual earnings of $0.72 per share.

In pre-market trade, DLTR was trading at $96.20 down $2.75 or 2.78 percent. WEN was trading at $20.58 down $0.72 or 3.38 percent.

Meanwhile, Dollar Tree reported that its fourth-quarter net income climbed 309 percent to $502.8 million from the prior year's $123.0 million, with earnings per share improving to $2.13 from $0.52 in the prior year's quarter. The fourth quarter of fiscal 2019 included several discrete charges. Excluding the discrete charges, earnings per share increased 19.0 percent, compared to the adjusted $1.79 last year. Analysts polled by Thomson Reuters expected the company to report earnings of $2.11 per share for the fourth-quarter. Analysts' estimates typically exclude special items.

Operating income for the fourth-quarter improved 173 percent to $681.6 million, from $249.4 million in the same period last year. Excluding the goodwill impairment charge and the charge to the litigation reserve from the prior year's quarter, operating income margin improved 90 basis points from the adjusted 9.2 percent.

Dollar Tree's board increased the company's share repurchase authorization by $2.0 billion. The authorization has no expiration date. The company now has a $2.4 billion share repurchase authorization, combined with $400 million remaining on its prior authorization.

Consolidated net sales for the fourth-quarter increased 7.2 percent to $6.77 billion from $6.32 billion in the prior year's fourth quarter. Wall Street analysts had a consensus revenue estimate of $6.79 billion for the fourth-quarter.

Enterprise same-store sales increased 4.9 percent on a constant currency basis or 5.0 percent when adjusted to include the impact of Canadian currency fluctuations. Same-store sales for Family Dollar increased 8.1 percent. Dollar Tree same-store sales increased 2.4 percent.

Dollar Tree said it is combining Family Dollar's great value and assortment with Dollar Tree's "thrill of the hunt" and fixed price-point - creating a new strategic store format targeted for small towns and rural communities with populations of 3,000 to 4,000. These are markets where the company would traditionally not open a Dollar Tree store alone.

Moreover, Wendy's reported that its fourth-quarter net income rose 46.0 percent to $38.73 million from last year's $26.53 million, due to higher operating profit, partially offset by lower investment income as the result of a cash settlement related to a previously held investment that the Company received in the prior year.

On a per share basis, net income was $0.17 compared to $0.11 in the prior year. Adjusted earnings per share was $0.17 compared to $0.08 in the prior year. Analysts expected the company to report earnings of $0.18 per share for the quarter. Analysts' estimates typically exclude special items.

Operating profit for the quarter increased to $78.57 million from $36.72 million last year. The increase in operating profit resulted primarily from higher franchise royalty revenue and fees, lower franchise support and other costs related to the Company's investments in the prior year to support the U.S. system in advance of its breakfast launch, an increase in Company-operated restaurant margin, and lower reorganization and realignment costs. These increases were partially offset by an incremental Company investment in breakfast advertising of $6.3 million and higher general and administrative expense.

Revenues for the fourth-quarter grew about 11 percent to $474.32 million from $427.19 million in the prior year, driven by higher sales at Company-operated restaurants and an increase in franchise royalty revenue and fees. The increases were primarily driven by the impact of the 53rd operating week and an increase in same-restaurant sales driven by the company's new breakfast daypart in the U.S. Analysts expected revenues of $476.39 million for the fourth-quarter.

Adjusted revenue were $382.1 million up 11.8 percent from $341.7 million in the previous year.

Through the week ended February 21, year-to-date U.S. same-restaurant sales increased approximately 6 percent and Global same-restaurant sales increased approximately 5 percent.