Dollar Tree stock slides 11% despite better-than-expected Q2 results

August 24, 2023 07:27 AM PDT | By Invezz

Dollar Tree stock slides 11% despite better-than-expected Q2 results — Image source: Invezz

Dollar Tree stock down on guidance

The stock is being punished also because the management tightened its outlook for the full year. Dollar Tree now forecasts its sales to come in between $30.6 billion and $30.9 billion in fiscal 2023 – still above analysts at $30.4 billion.

Its guidance for per-share earnings of about $5.93 a share, though, missed consensus by some 10 cents. Jeff Davis – the Finance Chief of Dollar Tree said today in a press release:

Our outlook takes into consideration several factors including shifting sales mix, unfavourable shrink trends, higher diesel fuel prices, incremental savings on ocean freight, and improved sales performance.

Dollar Tree stock is now down roughly 20% versus its year-to-date high.

Notable figures in Dollar Tree Q2 results

Earned $200.4 million versus the year-ago $359.9 million
Per-share earnings also declined from $1.61 to 91 cents
Adjusted EPS also printed at 91 cents as per the press release
Revenue increased 8.0% year-on-year to $7.325 billion
Consensus was 87 cents a share on $7.182 billion in revenue
Gross margins lost 220 basis points to come in at 29.2%

Much like its peers, Dollar Tree attributed the weakness in its recently concluded quarter partly to shrink. Still, its CEO Rick Dreiling said in the press release:

While factors like sales mix and elevated shrink continue to pressure margins, we generated a year-over-year increase in gross profit dollars.

Note that comparable sales went up a better-than-expected 7.8% in Q2. Wall Street currently rates Dollar Tree stock at “overweight”.

The post Dollar Tree stock slides 11% despite better-than-expected Q2 results appeared first on Invezz.

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