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Key Takeaways
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Dollar Tree reported second-quarter earnings below what analysts’ expectations Wednesday, with profits falling year-over-year.
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Executives said the company is facing “immense pressures” from the economic environment.
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The comments are similar to those from executives at Dollar General, who last week said they saw a “financially constrained” consumer.
Dollar Tree (DLTR) shares tumbled in premarket trading Wednesday after the discount retailer reported another earnings miss and said it is facing “immense pressures from a challenging macro environment.”
The retailer posted $132.4 million in net income for the second quarter of fiscal 2024, down from $200.4 million last year and well below analysts’ estimates compiled by Visible Alpha. Revenue rose slightly to $7.38 billion but was still below expectations.
The retailer also lowered sales and profit projections for fiscal 2024, expecting revenue from $30.6 billion to $30.9 billion, down from $31.0 billion to $32.0 billion previously. Adjusted earnings per share (EPS) are now expected to be within a range of $5.20 to $5.60, compared with $6.50 to $7.00 previously.
Dollar Tree Executives See Pressured Consumer
Chief Executive Officer (CEO) Rick Dreiling said the company is making progress despite “immense pressures from a challenging macro environment,” while Chief Financial Officer (CFO) Jeff Davis said earnings were negatively impacted by the “increasing effect of macro pressures on the purchasing behavior of Dollar Tree’s middle- and higher-income customers.”
Their comments echo those made last week by executives at rival Dollar General (DG), who said they see “financially constrained” consumers who are “less confident” in their financial position and spends less on discretionary products as a result.
Wednesday’s results are another disappointment for Dollar Tree, which reported earnings below estimates in the two previous quarters. In its Q1 report, the company said it was exploring “strategic alternatives” including selling or spinning off the Family Dollar brand roughly a decade after acquiring it, while in the prior quarter Dollar Tree said it planned to close about 1,000 stores.
Dollar Tree shares sank almost 10% to $73.72 about 45 minutes before the opening bell Wednesday. They are down more than 40% year-to-date.
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