According to Zhijun Finance, Dollar Tree (DLTR.US) has released its third-quarter financial results. Data shows that Q3 sales improved, indicating that this discount store has made progress in fending off competition and attracting more shoppers. Net sales increased by 3.6% year-on-year to 7.57 billion dollars, while the average analyst expectation was 7.44 billion dollars. The company's adjusted eps was 1.12 dollars, according to data compiled by LSEG, while the expectation was 1.07 dollars.

In the three months ending November 2, same-store sales increased by 1.8%. Same-store sales in the Dollar Tree and Family Dollar segments rose by 1.8% and 1.9% respectively, exceeding Wall Street analysts' expectations.

Due to more customers purchasing affordable essentials, including groceries, at discount stores, this discount retailer raised its full-year sales forecast, currently expecting sales of 30.7 billion to 30.9 billion dollars (previously expected to be 30.6 billion to 30.9 billion dollars), with the midpoint higher than market expectations.

After the performance announcement, the stock rose 4.1% in pre-market trading on Wednesday. As of Tuesday's close, the stock price has fallen 49% this year, while the s&p 500 index increased by 27% during the same period.

Dollar Tree also stated that its chief financial officer Jeff Davis will resign early next year. The company has begun looking externally for a successor. The performance mentioned will ease the pressure on interim CEO Michael Creedon. Last month, former CEO Rick Dreiling resigned due to health issues, and Creedon took over his position. Dollar Tree and other discount stores have had weak sales this year as low-income shoppers continue to face pressure after years of high inflation and high interest rates.

Dollar stores also struggle to compete effectively with companies like walmart (WMT.US), which offer delivery options and a wider range of low-priced products. Some retailers, including Aldi Inc., are ramping up promotions. Dollar Tree has expanded its product range to include commodities priced up to 7 dollars. Competitor dollar general (DG.US) is set to announce its performance in pre-market trading on Thursday.

So far, the stock prices of these discount companies have been declining throughout 2024. Retailers have previously lowered their annual expectations due to sales falling short of expectations. The two "dollar store giants," Dollar Tree and dollar general, have both undergone leadership changes: dollar general parted ways with its former chief financial officer in October 2023, and the chief executive officer of Dollar Tree resigned on November 4. Dollar Tree is also considering selling its more grocery-focused brand, Family Dollar.

For a dollar store that was once Wall Street's darling, these results represent a huge shift. Peter Keith, a retail analyst at Piper Sandler, stated that a series of challenging factors have hurt retailers. Low-income customers tend to shop at chain stores, and they are most vulnerable to economic changes such as inflation. He mentioned that a streamlined employee structure and low hourly wages have led to a thin operation model, causing messy aisles and a poor customer experience. Competition has also become increasingly fierce, with traditional retailers like walmart. During the pandemic, walmart made significant investments in e-commerce to keep up with changing consumer habits.

Sandler explained, "Dollar stores are convenient in themselves because they have many locations, but they lack very strong digital products, and I think this has become a disadvantage in the current environment."