Dollar Tree stock falls nearly 25% after weakening guidance

Dollar Tree (DLTR) shares have dove by nearly 25% in Wednesday's session after the discount retailer cut its full-year 2024 guidance and missed its second quarter earnings estimates. Dollar Tree reported $7.37 billion in revenue (expected $7.49 billion) and adjusted earnings of $0.67 per share (expected $1.05 per share).

Market Domination's Julie Hyman and Josh Lipton examine Dollar Tree's falling stock price in a tightening consumer environment, which is enabling big box retailers to muscle in on the market share of lower-end discount chains.

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This post was written by Luke Carberry Mogan.

Video Transcript

Uh let's talk about Dollar tree as well.

Those shares are sinking sharply lowered its full year guidance, the discount retailer noting macro pressures on the purchasing behavior of Dollar Tree's middle and higher income consumers.

And that is what is new here because you know, the sort of weakness among lower income consumers has been well known dollar tree now highlighting that it is that weakness in the middle and upper income.

But you know, that's, that's different.

That's one of the things behind the cut to the forecast here and one of the reasons stock is down so much.

Yeah, there's when you talk about these names, I mean, they do, they do cater to lower income folks and we know they've been under pressure, inflation and rates.

Um So there's the mac where there's also the competition.

I mean, you could think of names like Walmart um in terms of what is so, you know, obviously, which is be firing on all cylinders in terms of what is ahead.

Dollar Tree is reviewing strategic options for family dollar, but it didn't sound like we we had any updates on that process and just quickly here, analysts got kind of colorful on this one, Scott uh Ciccarelli over at uh trues, for example, he says investors expected a mess and that's what they got.

But at the same time, he thinks the bad news is largely priced in and he's still a buy on that name.