Dollar Tree (DLTR) stock is spiraling in Wednesday's session after the dollar-store chain missed top- and bottom-line expectations for its second quarter and slashed its full-year outlook.
In the 13 weeks ended August 3, Dollar Tree's revenue increased 0.7% to $7.4 billion, helped by a 0.7% improvement in same-store sales growth. Its earnings per share (EPS) decreased 26.4% from the year-ago period to 67 cents.
The "vast majority" of the earnings slump was "attributable to an adjustment of our general liability accrual, a portion was attributable to a comparable-store-sales shortfall which reflected the increasing effect of macro pressures on the purchasing behavior of Dollar Tree's middle- and higher-income customers," said Dollar Tree Chief Financial Officer Jeff Davis in a statement.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results came up short of analysts' expectations. Wall Street was anticipating revenue of $7.5 billion and earnings of $1.04 per share, according to Yahoo Finance.
As a result of its weak performance in the first half and "a more conservative sales outlook at Dollar Tree for the balance of the year," the company cut its full-year outlook.
It now anticipates revenue in the range of $30.6 billion to $30.9 billion, comparable-store sales growth in the low-single-digits and earnings per share to arrive between $5.20 to $5.60.
This compares with Dollar Tree's previous outlook of revenue in the range of $31 billion to $32 billion, comparable-store sales growth in the low-to-mid-single digits, and earnings per share of $6.50 to $7.00.
Is Dollar Tree stock a buy, sell or hold?
Similar to its peer Dollar General (DG), which recently suffered its worst day ever after earnings, Dollar Tree has struggled on the charts this year, down 54% so far. Yet, Wall Street remains bullish on the consumer staples stock.
According to S&P Global Market Intelligence, the average analyst target price for DLTR stock is $131.13, representing implied upside of roughly 100% to current levels. Meanwhile, the consensus recommendation is a Buy. However, analysts may very well revise their ratings and price targets lower following the earnings miss and reduced guidance.
Financial services firm UBS Global Research is one of the more bullish outfits on DLTR stock with a Buy rating and $155 price target.
“We believe the DLTR story remains compelling," said UBS analyst Michael Lasser in an August 29 note.
Lasser says there are several potential catalysts for Dollar Tree, including it being a beneficiary to moderating inflation or deflation in some categories, its rollout of higher shelves and merchandising resets, its expansion of multi-price assortment, and an improvement in profitability from its portfolio review of its Family Dollar brand.
However, the analyst adds that "the market probably won't recognize these favorable attributes until estimates stop moving lower."
Related Content
-
Ten Cheapest Places to Live in VirginiaProperty Taxes The Commonwealth of Virginia has some cheap places to live. Here are a few if you hate paying property taxes.
-
Strong April Jobs Report Lowers Rate-Cut Hopes: What the Experts Are SayingThe June jobs report shows that hiring remains strong and gives the Fed a little extra breathing room when it comes to interest rates.
-
June Jobs Report Dashes July Rate Cut Hopes: What the Experts Are Saying
The June jobs report shows that hiring remains strong and gives the Fed a little extra breathing room when it comes to interest rates.
-
Investing Professionals Agree: Discipline Beats Drama Right NowBig portfolio adjustments can do more harm than good. Financial experts suggest making thoughtful, strategic moves that fit your long-term goals.
-
'Doing Something' Because of Volatility Can Hurt You: Portfolio Manager Recommends Doing This InsteadYes, it's hard, but if you tune out the siren song of high-flying sectors, resist acting on impulse and focus on your goals, you and your portfolio could be much better off.
-
Stock Market Today: S&P 500, Nasdaq Hit New Highs After Vietnam Trade DealAhead of a key July 9 tariff deadline, President Trump said the U.S. has reached a trade deal with Vietnam.
-
Social Security's First Beneficiary Lived to Be 100: Will You?Ida May Fuller, Social Security's first beneficiary, retired in 1939 and died in 1975. Today, we should all be planning for a retirement that's as long as Ida's.
-
An Investment Strategist Demystifies Direct Indexing: Is It for You?You've heard of mutual funds and ETFs, but direct indexing may be a new concept ... one that could offer greater flexibility and possible tax savings.
-
Q2 2025 Post-Mortem: Rebound, Risks and Generational ShiftsAs the third quarter gets underway, here are some takeaways from the market's second-quarter performance to consider as you make investment decisions.
-
Stock Market Today: Another Quarter, More Mixed Price Action"Up and to the right" remains the general trend despite persistent uncertainty around critical policy issues.
