Dollar Tree Bears Fruit

Dollar Tree Inc (DLTR) reported a 20% rise in quarterly profit and boosted its full-year guidance, sending shares up more than 5%. The discount retailer reaped benefited from the weak economy, which forced an increasing number of consumers to hunt for bargains.

In the third quarter, net income rose to $43.1 million, or 47 cents per share, while analysts were expecting a profit of 44 cents. Quarterly earnings also exceeded the company’s guidance of 40 cents to 43 cents per share.

For fiscal 2009, Dollar Tree now expects to earn $2.45 to $2.53 per share, up from its August guidance of $2.33 to $2.43 per share. The company also said it will continue to invest in its Deal$ chain, which sells items priced between $1 and $5.

Even though Dollar Tree cautioned that gross margins would come under pressure due to rising diesel prices, investors rejoiced the better-than-expected quarterly profit and upbeat guidance. Shares of the company were trading at $40.02 at noon, after reaching a high of $41.35 earlier in the day.

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