(Reuters) - Dollar Tree Inc <DLTR.O>, the biggest U.S. dollar-store chain, reported better-than-expected quarterly profit and sales on Wednesday, helped by lower costs and higher customer spending in its stores.
Shares of the retailer, which also owns the Family Dollar chain, rose 5 percent to $80.05 in premarket trading.
Dollar stores such as Dollar Tree and rival Dollar General Corp <DG.N> have expanded rapidly in recent years, taking market share from Wal-Mart Stores Inc <WMT.N> and others, thanks to smaller store sizes, a wider variety of products and prices starting at $1.00.
However, Wal-Mart and peer Target Corp <TGT.N> are fighting back and seeking to cut food prices. Target on Tuesday signaled it would rely more on low prices at the cost of margins to better compete with rivals.
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Sales at Dollar Tree stores open for more than a year rose 2.3 percent on a constant-currency basis in the fourth quarter ended Jan. 28, slightly above the 2.1 percent that analysts polled by research firm Consensus Metrix had expected.
Net income rose to $321.8 million, or $1.36 per share, from $229 million, or 97 cents per share, a year earlier.
Net sales rose 5 percent to $5.64 billion, as more customers visited its stores and also spent more on average.
Analysts on average had expected earnings of $1.32 per share and revenue of $5.62 billion, according to Thomson Reuters I/B/E/S.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Sai Sachin Ravikumar)