Market Commentary

Dollar Tree Tumbles After Slashing Guidance

Raza Akram
6 Feb 2024 · 1 minute read

Dollar Tree (DLTR:US) shares plunged as much as 12% on Thursday after the company lowered its full-year guidance.

Dollar Tree said its first-quarter revenue rose 6.1% year-over-year to $7.32 billion, in line with analyst estimates. Enterprise comparable sales jumped 4.8%, topping expectations of 3.5%. The better-than-expected sales were boosted by a 6.6% jump in Family Dollar comparable sales.

On the bottom line, the adjusted EPS came in at $1.47 - worse than the expected $1.54. The gross margin contracted 340 basis points from the year-ago period to 30.5%. Analysts were expecting 31.6%.

For this quarter, the company sees EPS of $0.84 on revenue of $7.1 billion. This compares to the expectations for EPS of $1.27 on revenue of $7.16 billion. For FY24, Dollar Tree lowered its outlook to $5.93 from the prior $6.55, a large miss compared to the $6.64 expectations.

“While we are seeing early results from our initiatives, we are not immune to the external pressures affecting all of retail, notably, the margin impact of elevated shrink and the product mix shift to consumables,” said Rick Dreiling, Chairman, and Chief Executive Officer.

Net sales are seen at $30.25 billion, below the prior forecast of $30.3 billion and the consensus at $30.36 billion.

Dollar Tree shares now trade in mid $130s after Thursday’s selloff. Congressman Daniel Goldman was buying DLTR shares this year, including on April 10 when the stock closed at $152.93.

In September last year, Rep. Michael McCaul reported two $100,000 - $250,000 sell transactions.