Dollar Tree slips after sales forecast falls short of estimates
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Dollar Tree (NASDAQ:DLTR) fell in early trading on Wednesday after falling short of estimates with revenue for the holiday quarter and guiding for 2022 sales also short of the consensus mark.
The retailer recorded same-store sales growth across the Enterprise (+2.5%), Dollar Tree (+3.1%) and Family Dollar (+1.7%) channels during the quarter and topped the EPS consensus mark.
Gross margin was 30.2% of sales vs. 31.8% a year ago. The 160 basis point decrease was driven by higher freight costs and recall-related markdowns, partially offset by improved initial mark-on and favorable product mix, reduced shrink and leverage on distribution costs.
Operating income for the quarter was $578.8M vs. $681.6M a year ago. Operating income margin was 8.2% compared to 10.1% a year ago.
Dollar Tree (DLTR) completed the rollout of the $1.25 price point to all of its U.S. Dollar Tree stores in late February 2022, which was more than two months ahead of schedule.
Wells Fargo weighed in on the Dollar Tree (DLTR) report, saying it should be solid enough to keep investors engaged. "2022 comp guidance of a low- to mid-single-digit gain for the total company leaves the door open for an acceptable level of elasticity as long as the result is ultimately at the high end of this range. It's also notable that the rollout of $1.25 was completed at the end of February, which was clearly much earlier than expected," noted analyst Edward Kelly.
Kelly added that the tone of the DLTR release doesn't sound like a company ready to give up in its proxy battle with Mantle Ridge.
Shares of Dollar Tree (DLTR) fell 1.22% in premarket action to $138.00 vs. the 52-week trading range of $84.26 to $149.37.