Image source: Dollar Tree.

What happened

Shares of retailer Dollar Tree (DLTR 0.59%) rose on Tuesday following the company's third-quarter results. The numbers were mixed relative to analyst estimates, but a surge in profits gave investors a reason to drive up the stock price. At 11:30 a.m. EST, the stock was up about 10%.

So what

Dollar Tree reported third-quarter revenue of $5 billion, up 1.1% year over year but $80 million below the average analyst estimate. Same-store sales rose 1.7% on a constant currency basis, extending the company's streak of positive same-store sales growth to 35 consecutive quarters.

Non-GAAP earnings per share (EPS), which excludes costs related to debt refinancing, came in at $0.81, up from $0.35 in the prior-year period and $0.03 better than analysts were expecting. Gross margin improved by 2.1 percentage points year over year to 30.4%, driving an 8.6% increase in gross profit and a 53% increase in operating profit. Operating expenses were essentially flat compared to the prior-year period.

"I am proud of our team's achievements in our third quarter. Our results demonstrated a solid performance in our Dollar Tree segment, continued meaningful progress in our integration of Family Dollar, and our ability to refinance and pre-pay a portion of our outstanding debt in order to reduce future interest costs," said Dollar Tree CEO Bob Sasser.

Now what

Dollar Tree's guidance was a mixed bag. For the fourth quarter, the company expects revenue between $5.59 billion and $5.69 billion, with EPS in the range of $1.24 to $1.33. That EPS guidance is up from previous guidance of $1.21 to $1.30.

For the full year, Dollar Tree lowered its sales guidance slightly. Revenue is expected between $20.67 billion and $20.77 billion, down from a previous range of $20.69 billion to $20.87 billion. EPS is now expected between $3.67 and $3.76. This is down from previous guidance of $3.67 to $3.82, but those numbers didn't include the $0.09- per-share impact from debt refinancing.

"I am encouraged by our continued progress in building the foundation for a larger, stronger and more profitable Family Dollar business," continued Sasser. "The stores are cleaner, the values are greater and our customer feedback scores regarding merchandise assortments and in-stocks have improved. As a combined organization, we are uniquely positioned to efficiently grow our businesses to better serve more customers in more markets. We are well-positioned and prepared for the upcoming fourth quarter and holiday selling season."