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New York Interest > Blog > Business > Dollar Tree stock falls 20% after cutting forecasts
Business

Dollar Tree stock falls 20% after cutting forecasts

NewYork Interest Team
Last updated: September 4, 2024 6:12 pm
NewYork Interest Team
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Dollar Tree stock falls 20% after cutting forecasts
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Dollar Tree’s stock price plunged by more than 20% on Wednesday after the discount retailer missed quarterly estimates and slashed its annual forecasts — another sign that inflation-weary consumers are paring back spending.

“Customers are expanding their consumption (on low-margin essentials) while contracting their spending on discretionary items because of macro belt-tightening,” Dollar Tree CFO Jeff Davis said on a post-earnings call.

Dollar Tree has seen its stock price fall by 20% after slashing its annual forecasts. REUTERS

Shares of Dollar Tree were trading at around $65 a share — the lowest in more than four years.

Last week, rival Dollar General’s shares also slumped nearly 30% after the discount retailer slashed its annual sales and profit forecast.

Dollar Tree has felt the pinch of stiffer competition in the retail space as wealthy big box chains including Walmart and Target have lured low- and middle-income shoppers with discounted prices on products ranging from groceries to apparel.

American consumers have also gravitated to online discount retailers such as newcomers Temu and Shein.

Dollar Tree has been in the process of restructuring its business and in April said it was exploring options, including a potential sale or spinoff of its Family Dollar banner.

Consumers have cut back on spending as inflation has stayed elevated in recent years. REUTERS

Earlier this year, it had outlined plans to shutter 970 Family Dollar stores. As of Aug. 3, Dollar Tree has shuttered about 655 stores and will close 45 stores through the remainder of the year, the company said on Wednesday.

The Chesapeake, Va.-based company expects annual sales between $30.6 billion and $30.9 billion, compared with its prior forecast range of $31 billion to $32 billion.

Dollar Tree faces intense competition in the retail space from the likes of Walmart, Target and Temu. Rene Ray De La Cruz/The Daily Press / USA TODAY NETWORK

The company sees annual adjusted earnings per share in the range of $5.20 to $5.60, compared with its prior forecast range of $6.50 to $7 per share.

Dollar Tree posted net sales of $7.37 billion, compared with analysts’ estimates of $7.49 billion, according to LSEG data.

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