Dollar Tree Stock Drops on Soft Demand and Below-Expected Earnings

Dollar Tree stock witnessed a decline on Wednesday as the discount retailer adjusted its fiscal 2023 guidance due to sluggish demand and reported lower-than-expected third-quarter earnings.

Third-Quarter Performance

In the third quarter, Dollar Tree reported earnings of 97 cents per share with a revenue of $7.31 billion. However, analysts surveyed by FactSet had anticipated earnings of $1.01 per share on revenue of $7.4 billion. The company’s same-store sales growth came in at 3.9%, falling short of analysts’ expectations of 5.3%.

Yearly Comparison

In comparison to the same period last year, Dollar Tree recorded a profit of $1.20 per share on revenue amounting to $6.94 billion.

Updated Financial Guidance for 2023

Dollar Tree unveiled an update to its fiscal 2023 financial guidance. The Chief Financial Officer, Jeff Davis, mentioned in a press release that the guidance takes into account several factors, including the strong performance of the Dollar Tree banner, increased savings on freight costs, weaker demand from low-income households, and the persistent challenges of shrinkage and sales mix throughout the year.

The revised outlook for fiscal 2023 now predicts earnings between $5.81 to $6.01 per share, compared to the previous guidance range of $5.78 to $6.08. Additionally, revenue estimates for the fiscal year have been adjusted to fall between $30.5 billion and $30.7 billion, as opposed to the prior outlook of $30.6 billion to $30.9 billion.

Stock Performance

Shares of Dollar Tree experienced a 2% decrease during premarket trading on Wednesday, reaching $113.70. So far this year, the stock has seen an overall decline of 18%.

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