Shares of Dollar Tree plunged nearly 15% in early trading Thursday after the company fell short of Wall Street’s earnings expectations for the most recent quarter and slashed its profit outlook for the full year.
Here’s how the discounter did in its fiscal first quarter compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:
- Earnings per share: $1.47, adjusted, vs. $1.52 expected
- Revenue: $7.32 billion vs. $7.28 billion expected
The company’s reported net income for the three-month period that ended April 29 was $299 million, or $1.35 a share, compared with $536.4 million, or $2.37 a share, a year earlier. On an adjusted basis, the company reported earnings of $1.47 per share, falling below Wall Street projections.
Sales rose to $7.32 billion, up from $6.9 billion a year earlier.
Same store sales were up 4.8% compared to an expected uptick of 3.6%, according to Street Account estimates.
Following the disappointing quarter, Dollar Tree lowered its profit outlook for the full year to a range of $5.73 to $6.13 per share, down from a prior range of $6.30 to $6.80 per share. Analysts polled by Refinitiv had been expecting full-year earnings of $6.68 per share.
The lower outlook was attributed to elevated shrink, or items that were damaged, lost or stolen, and a shift in product mix to consumables, which carry lower margins, Dollar Tree’s CEO Rick Dreiling said in a news release.
“While we are seeing early results from our initiatives, we are not immune to the external pressures affecting all of retail,” said Dreiling.
“While we are maintaining our full-year 2023 sales outlook, we are adjusting our EPS outlook as we expect the elevated shrink and unfavorable sales mix to persist through the balance of the year. We still expect earnings to be more back-end loaded this year as the benefits of lower ocean freight rates flow through.”
The company largely maintained its full-year sales forecast, however, projecting net sales in the tightened range of $30 billion to $30.5 billion. Its forecasting low- to mid-single-digit comparable store sales.
For the second quarter, the company expects earnings per share of 79 cents to 89 cents in its second quarter versus Refinitiv consensus estimates of $1.22.