08:36 AM EDT, 03/13/2024 (MT Newswires) -- Dollar Tree ( DLTR ) swung to an unexpected fiscal fourth-quarter net loss, weighed down by charges related to a review of its stores portfolio, while the discount retailer issued a downbeat profit outlook for the current three-month period.

The company posted a per-share loss of $7.85 for the quarter ended Feb. 3, compared with earnings of $2.04 the year before. The consensus on Capital IQ was for earnings of $2.65 per share. During the quarter, the retailer took a $594.4 million hit from its store optimization review, which included shutting down and re-locating branches. It also incurred a $950 million trade name impairment charge and a $1.07 billion goodwill charge.

"We took a thoughtful and deliberate approach to address underperforming stores by considering each individual store's performance, local operating environment, and our broader need for scale and operating efficiencies across the portfolio," Chief Executive Rick Dreiling said during an earnings call, according to a Capital IQ transcript. "We believe rationalizing these unprofitable locations will help to unlock meaningful value at the enterprise level."

On an adjusted basis, Dollar Tree ( DLTR ) recorded EPS of $2.55 versus $2.04 in the prior-year quarter, missing the Street's view for $2.65. Total revenue rose to $8.64 billion from $7.72 billion, but was just shy of analysts' $8.65 billion estimate. The stock dropped 5.7% in recent premarket trading.

Same-store sales grew 3%, below the 3.3% gain modeled by the Street at the enterprise level. Dollar Tree ( DLTR ) comparable sales advanced 6.3% driven by a 7.1% increase in traffic, while the Family Dollar brand declined 1.2% due to a 2% decrease in average ticket.

For the current quarter, the company expects earnings to be in a range of $1.33 to $1.48 a share and sales to be between $7.6 billion and $7.9 billion. The Street is looking for EPS of $1.71 and revenue of $7.69 billion. Enterprise same-store sales are expected to rise by a low-to-mid-single digit, while the consensus on Capital IQ is for growth of 2.5%.

Dollar Tree ( DLTR ) anticipates EPS of $6.70 to $7.30 for fiscal 2024 on a sales range of $31 billion to $32 billion. The market view is for normalized and GAAP EPS of $7.07 and $7.02, respectively, and revenue of $31.74 billion. Comparable store sales are expected to rise by a low- to mid-single digit, including a mid-single-digit increase in the Dollar Tree ( DLTR ) segment and a low-single-digit boost in Family Dollar.

The company forecasts shrink, which refers to inventory lost due to theft or internal issues, and mix levels to be a headwind in the first half of the year, Chief Financial Officer Jeff Davis said in a statement. Favorable freight rates and moderating headwinds from reduced benefits from the Supplemental Nutrition Assistance Program throughout the year should provide a boost to the retailer, Davis added.

Dollar Tree ( DLTR ) plans on closing about 600 Family Dollar stores in the first half of fiscal 2024. The retailer is also targeting the closure of roughly 370 Family Dollar and 30 Dollar Tree ( DLTR ) branches over the next several years, following the end of each store's current lease term.

"Collectively, we estimate that net sales loss from the stores we intend to close this year is approximately $730 million on an annual run rate basis," Dreiling told analysts on the call. "On the other hand, given their historical underperformance, we would get back approximately $0.30 of annual run rate EPS net of any stranded costs."

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