Why Discount Store Chain Dollar Tree Shares Are Plunging Today

Dollar Tree Inc DLTR shares are trading lower after the company reported fourth-quarter FY23 sales growth of 11.9% year-on-year to $8.63 billion, missing the analyst consensus estimate of $8.67 billion.

Same-store sales increased 6.3% for the Dollar Tree segment, declined 1.2% for Family Dollar, and grew 3% for Enterprise.

Gross profit for the quarter increased 16.2% Y/Y to $2.77 billion, and the gross margin expanded 120 basis points to 32.1%.

Operating loss for the quarter totaled $(1.89) billion compared to an operating income of $618.1 million. Adjusted EPS of $2.55 missed the consensus estimate of $2.65.

The company held $684.9 million in cash and equivalents as of February 3, 2024. Operating cash flow for twelve months totaled $2.68 billion.

The company opened 219 new stores in the quarter and closed 72 stores. Dollar Tree repurchased 3.9 million shares in the quarter for $504.3 million.

“Our core operating performance was strong in the fourth quarter, despite some unanticipated developments related to general liability claims,” said CFO Jeff Davis.

Outlook: Dollar Tree sees FY24 net sales of $31 billion – $32 billion versus the consensus of $31.65 billion. Adjusted EPS of $6.70 – $7.30 against an estimate of $7.04.

Dollar Tree expects first-quarter net sales of $7.6 billion – $7.9 billion versus the $7.68 billion estimate. Adjusted EPS of $1.33 – $1.48 against the Street view of $1.69.

Price Action: DLTR shares are trading lower by 7.48% at $138.50 in premarket on the last check Wednesday.

Image by Jonathan Weiss via Shutterstock