Dollar Tree (DLTR) reported its fiscal quarter results and it exceeded analysts’ expectations. However, the shares of the discounter fell to a 52-week low after an investors call mentioned that the company was under pressure due to a tough economy and spending habits were reverting to those that prevailed in pre-pandemic times. Other major retailers have also mentioned similar factors in investors’ calls and have seen a drop in the share price.
Although Dollar Tree, which includes its namesake as well as Family Dollar that focuses more on groceries, reported better than expected fiscal second quarter results, the stock price fell by 10 percent.
According to analysts surveyed by Refinitiv, the earnings per share was expected to be 87 cents but the company reported a higher EPS of 91 cents. It also reported a higher revenue of $7.32 billion while the analysts’ estimated revenue was $7.18 billion.
Dollar Tree reported that net income fell to $200.4 million when compared with the same quarter last year. This year’s earnings per share were 91 cents, while the earnings per share was $1.61 in the same fiscal quarter in 2022.
The company saw a 6.9 percent rise in same-store sales. The sales increased by 7.8 percent in the Dollar Tree chain of stores while Family Dollar stores saw a 5.8 percent rise in sales, when compared with the same quarter last year.
Dollar Tree CEO Rick Dreiling said that shopping patterns among consumers reflected a tougher economic scenario.
Dollar Tree’s margins have been affected not only by less spending on discretionary items by consumers as grocery items have smaller profit margins but also due to wage revisions. Other expenditure included investments in repairing stores and higher utility bills due to a hotter summer.
Dollar Tree CEO Dreiling also told investors that the discounter was taking new approaches to deal with shrink, which is loss of merchandise due to burglary, thefts and high return of goods. These efforts include putting certain merchandise under lock and key as well as removing some items that face extra shrink.
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