Source: Dollar Tree

A shortened holiday season, cold temperatures, a bad economy, and storms all kept shoppers inside, and out of the retail stores. Foot traffic reportedly fell by 15% at the malls -- and drops were even worse in some areas.

Yet through it all, the crowds only got thicker and the lines only got longer at Dollar Tree (DLTR 0.04%). 

The money-growing results
Dollar Tree reported fiscal fourth-quarter results on Feb. 26. When adjusting for the discrepancy in the fiscal calendar, net sales rose 4.7%. Same-store sales inched up 1.2% in addition to the 2.4% rise last year. Adjusted earnings per share jumped 9% to $1.10.

This occurred despite the fact that there were six less shopping days between Thanksgiving and Christmas, which represented what CFO Kevin Wampler called "the $25 million sales challenge" three months ago. 

According to CEO Bob Sasser, all these gains came despite several headwinds. He stated:

Dollar Tree delivered record earnings and our comparable-store sales grew, despite severe weather, a shorter Holiday selling period and a challenging economic environment. More customers are shopping Dollar Tree, responding to our incredible values and convenient shopping experience. Our inventories are fresh and our stores are full of exciting merchandise for the spring season.

It sounds like the headwinds are no match for Dollar Tree. Did Family Dollar Stores (NYSE: FDO) and Dollar General (NYSE: DG) experience the same thing? We'll get to that in just a moment. But first...

Showering shareholders with cash
While the money seems to be growing on trees for Dollar Tree, it's likewise raining on shareholders. The company has authorized a $1 billion share buyback which it plans to execute by June 2014. Given the company's $11 billion market cap, this is a large cash return for such a short time-frame.

Source: Dollar Tree

Despite all of those bucks being returned to shareholders, the company expects that 2014 will be another year of growth. It expects the total floor space of its chain to grow by 7%, a continued climb in same-store sales, and adjusted earnings per share exploding by between 19% and 28%. That doesn't even include the earnings per share increase that would naturally occur due to the impact from the share buyback. If, for instance, Dollar Tree bought back 9% of its shares (based on the current authorization and market cap), this would increase the company's earnings per share by 10%.

More goodies and a question mark
The conference call included some tidbits of interest. First, December was Dollar Tree's strongest month with a 4% same-store sales increase even with several stores temporarily closed due to the bad weather. In January, Sasser warned, Dollar Tree saw an impact three times worse in terms of store closing days than it saw in December.

As a bit of a nitpick, CFO Kevin Wampler again mentioned the six-day shorter holiday shopping season as a challenge that Dollar Tree was up against. This time he called it the "$30 million sales challenge." Last time it was the "$25 million sales challenge." Where did those extra 5 million goods at a buck each come from? 


Shopping the competition
Family Dollar Stores and Dollar General have yet to report their results for the quarter that includes December, although Family Dollar Stores already pre-announced a same-store sales drop of 3% for December and expects earnings per share to dive 21% to 30% for the quarter. Despite this, Family Dollar Stores sees "ample opportunity" ahead. It looks like Family Dollar Stores is watching Dollar Tree. The opportunity is certainly there. 

Meanwhile, Dollar General has grown like Dollar Tree. It too announced a $1 billion stock buyback, plans to grow its store selling footage by between 6% and 7%, and saw strong sales growth across the board. Last quarter Dollar General reported its 23rd quarter in a row of both increased foot traffic and increased average ticket per customer. 

The million-dollar question
There is likely little question in your mind by now that over time Dollar Tree is going to continue to grow both in terms of sales and earnings per share. That leaves the question of valuation. With a modest 15 P/E ratio going by next year's analyst estimates, Dollar Tree deserves a closer look. The company is growing fast in all areas and it isn't shy about rewarding shareholders.