Dollar Tree, Inc.'s $Dollar Tree (DLTR.US)$ stock is falling 18% after the company reported worse-than-expected second-quarter 2024 earnings. The discount variety stores chain reported an adjusted EPS of $0.67, missing the consensus of $1.04, and down 26.4% year over year.
Chief Financial Officer Jeff Davis added, "Our adjusted EPS of $0.67 was $0.38 below the midpoint of our previous outlook range. While the vast majority of this variance was attributable to an adjustment of our general liability accrual, 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."
The company reported sales of $7.38 billion, up marginally by 0.07%, missing the consensus of $7.5 billion.
Dollar Tree reported same-store sales growth of 1.3%, the Family Dollar segment reported a marginal decline of 0.1%, and the Enterprise segment reported same-store sales growth of 0.7%.
During the second quarter, Dollar Tree initiated a formal review of strategic alternatives for the Family Dollar business segment, which could include a potential sale, spin-off, or other disposition of the business.
Guidance: The company is lowering its full-year fiscal 2024 consolidated net sales outlook range to $30.6 billion to $30.9 billion, down from prior guidance of $31 billion—$32 billion versus the consensus of $31.19 billion.
"We are updating our full-year outlook to reflect second-quarter results, including the general liability charge, a more conservative sales outlook at Dollar Tree for the balance of the year, and incremental start-up costs associated with the conversion of our recently acquired portfolio of 99 Cents Only Stores leases," Davis added.
The company expects to deliver comparable store net sales growth in the low-single-digits for the enterprise and both the Dollar Tree and Family Dollar segments.
Dollar Tree expects an adjusted diluted EPS of $5.20-$5.60 compared to prior guidance of $6.50-$7.00, versus the consensus of $6.56.
For the third quarter of 2024, Dollar Tree forecasts sales of $7.4 billion—$7.6 billion, compared to the consensus of $7.59 billion, based on comparable store net sales growth in the low single digits for the enterprise and both the Dollar Tree and Family Dollar segments.
Adjusted diluted EPS for the third quarter of 2024 is estimated to be $1.05-$1.15 compared to the consensus of $1.32.
