Dollar Tree is following in the footsteps of its competing dollar store, Dollar General, as the company cut its full-year outlook and shares dropped 20% during trading today.
Early this morning, Dollar Tree reported its updated 2024 outlook as its fiscal second quarter closed. The discount store adjusted its full-year net sales outlook range of $30.6 billion to $30.9 billion, as compared to its prediction after the first quarter of $31 billion to $32 billion.
This resulted in an adjusted earnings per share which is now expected to range from $5.20 to $5.60, compared to a previous prediction of $6.50 to $7.
“While the vast majority of this variance was attributable to an adjustment of our general liability accrual,” said CFO Jeff Davis in a statement, “a portion was attributable to a comp shortfall which reflected the increasing effect of macro pressures on the purchasing behavior of Dollar Tree’s middle- and higher-income customers.”
Beyond the macro pressures of the consumer economy, the liability challenges have had an adverse impact on net income, and come as the costs have risen to reimburse, settle, or litigate claims relating to customer accidents and other incidents at company stores, the company said.
Dollar Tree’s other dollar store brand, Family Dollar, has also been struggling as it announced a closure of almost 1,000 stores nationwide in March.
For the period ending August 3, 2024, the company’s net income was $132.4 million. Despite the lowered outlook, same-store net sales improved by 0.7% year-over-year. Dollar Tree same-store net sales grew 1.3% year-over-year, while Family Dollar same-store net sales declined by 0.1%.
“We are encouraged by the continuous progress we are making in the transformation underway at Dollar Tree and Family Dollar,” said chairman and CEO Rick Dreiling, “despite immense pressures from a challenging macro environment.”