Second-Quarter Earnings Beat Consensus but Fall Sharply
Dollar Tree Inc.'s stock (DLTR, +1.07%) experienced an 8.6% decline in premarket trade on Thursday following the release of its second-quarter earnings report. Although the earnings fell significantly from the previous year, they managed to beat consensus estimates.
The Chesapeake, Va.-based company reported a net income of $200.4 million, or 91 cents per share, for the quarter. This is a decrease from the $359.9 million, or $1.61 per share, earned during the same period last year. However, adjusted per-share earnings remained at 91 cents, surpassing the 87 cent FactSet consensus.
Dollar Tree also saw an increase in revenue to $7.325 billion compared to $6.769 billion in the previous year's quarter. The revenue exceeded the $7.182 billion FactSet consensus. Additionally, Dollar Tree same-store sales rose by 7.8%, outperforming the expected 4.8% increase according to FactSet.
In a statement, CEO Rick Dreiling acknowledged the challenges faced by the company, stating, "While factors like sales mix and elevated shrink continue to pressure margins, we generated a year-over-year increase in gross profit dollars." Many retailers have been grappling with shrink during this earnings season, attributing it to damaged items and organized shoplifting.
As part of its updated guidance for 2023, Dollar Tree tightened its sales range expectations to $30.6 billion to $30.9 billion. This is slightly higher than the FactSet consensus of $30.4 billion. The company also adjusted its expected earnings per share (EPS) range to $5.78 to $6.08, which is lower than the FactSet consensus of $6.03.
Despite these results, Dollar Tree's stock has only declined 0.6% year to date, whereas the S&P 500 (SPX, +1.10%) has gained 15.5%.