Discount store chain Dollar Tree beat Wall Street analysts’ expectations with its second-quarter earnings but seems less optimistic about its ability to do it for the whole year. This caused its stock to tumble close to 13% on Thursday.
Dollar Tree reported a profit of $0.91 per share in Q2, topping the $0.87 per share mark that was expected by analysts. However, it expects that its profit in the third quarter will be between $0.94-$1.09 per share, which is well below the estimated $1.29. The annual forecast is also soft, coming at $5.78 to $6.08 per share compared to estimates of $6.03 per share.
During a conference call, Dollar Tree CEO Richard Dreiling said that the annual forecast is based on expected rising costs and the fact that customers are buying more low-margin items.
“Regarding the industrywide shift in consumer purchasing behaviors to consumables, we believe this is reflective of the current macroeconomic environment,” Dreiling said.
Dollar Tree shares closed at $123.88 per share on Thursday, almost 13% down compared to Wednesday’s closing price of $142.22 per share. The stock is down 11% year to date and finds itself at the lowest mark since late 2021.