Why Dollar Tree Shares Are Falling Thursday (CORRECTED)

Editor’s note: This story has been updated to correct a headline error that erroneously attributed a quote from Dollar General’s CEO to the Dollar Tree CEO and wording in the story that conflated Dollar Tree and Dollar General.

Dollar Tree, Inc. DLTR shares were down nearly 10% Thursday following a disappointing earnings report from competitor Dollar General Corp DG.

Earlier this week, Wells Fargo analyst Edward Kelly maintained Dollar Tree with an Overweight rating. He also lowered the price target from $160 to $130.

Dollar Tree shares are moving in sympathy with its top peer Dollar General‘s sluggish results. Dollar General CEO Todd Vasos, cautioned about softer sales trends in the broader sector.

Core customers feel financially constrained, he says.

The retail behemoth reported second-quarter earnings per share of $1.70 Thursday, missing the analyst consensus of $1.78. Quarterly sales of $10.21 billion (+4.2% year over year) missed the Street view of $10.368 billion.

Also Read: Dollar General Q2 Earnings: Earnings Miss, Slashed Outlook And Shrinking Margins

“We are not satisfied with our financial results, including top line results below our expectations for the quarter,” Vasos said.

Vasos indicated that, in response to the changing retail and consumer environment, the company is taking decisive steps to improve its value and convenience offerings, as well as the in-store experience for both associates and customers.

“Dollar General has a long history of serving customers in a variety of macroeconomic environments, and we believe the actions we are taking will allow us to further strengthen our position and build on our Back to Basics progress, as we seek to deliver sustainable growth and long-term shareholder value,” Vasos added.

Dollar General has revised its fiscal year 2024 outlook, lowering its EPS forecast from a range of $6.80 to $7.55 to a new range of $5.50 to $6.20, compared to the $7.12 estimate.

The company also reduced its revenue forecast from $41.01 billion to $41.28 billion to a revised range of $40.51 billion to $40.74 billion, against the $41.02 billion estimate.

Dollar General continues to expect 2,435 real estate projects. That includes 730 new store openings, 1,620 remodels, and 85 store relocations in fiscal year in 2024.

Price Action: Dollar Tree shares are trading lower by 9.64% to $85.35 at last check Thursday. According to Benzinga Pro, the stock has lost over 23% in the past year.

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Photo courtesy of Dollar General.