Dollar Tree Updates Guidance, Q3 Profit Misses Estimates; Stock Plunges

Dollar Tree, Inc. (DLTR) announced the company now estimates that Section 301 tariffs will increase its cost of goods sold by approximately $19 million, or $0.06 per share, in the fourth quarter of 2019 if tariffs are fully implemented. Earnings per share for the quarter, including tariff costs, are now estimated to be in the range of $1.70 to $1.80. Consolidated net sales are projected in a range from $6.33 billion to $6.44 billion, based on a low single-digit increase in same-store sales for the enterprise.

Analysts polled by Thomson Reuters expect the company to report profit per share of $2.02, on revenue of $6.41 billion. Analysts' estimates typically exclude special items.

The company said the decrease from prior fourth-quarter guidance represents the expected effects of: Section 301 tariffs; additional pressure on merchandise margin based on lower-margin consumables growing faster than originally forecasted; payroll cost pressure in distribution centers; and increased run rates for repairs and maintenance, utilities and depreciation.

For fiscal 2019, Dollar Tree now estimates earnings per share will range between $4.66 and $4.76. In August, the company projected earnings per share in a range of $4.90 and $5.11. Consolidated net sales are now expected to range from $23.62 billion to $23.74 billion compared to the previously expected range of $23.57 billion to $23.79 billion. The updated guidance is based on a low single-digit increase in same-store sales. Analysts expect the company to report profit per share of $5.05, on revenue of $23.74 billion.

For the third-quarter, earnings per share was $1.08 compared to $1.18, last year. On average, 25 analysts polled by Thomson Reuters expected the company to report profit per share of $1.13, for the quarter.

Third-quarter consolidated net sales increased 3.7 percent to $5.75 billion from $5.54 billion, a year ago. Enterprise same-store sales increased 2.5 percent. Same-store sales for the Dollar Tree segment increased 2.8 percent. Same-store sales for the Family Dollar segment increased 2.3 percent. Analysts expected revenue of $5.74 billion, for the quarter.

During the quarter, the company opened 165 new stores, expanded or relocated 15 stores, and closed 42 stores. Also, the company opened 39 Dollar Tree stores that were re-bannered from Family Dollar.

Shares of Dollar Tree, Inc. were down more than 10% in pre-market trade on Tuesday.

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