Gary Philbin, CEO, Dollar Tree
Scott Mill | CNBC
Money tree missed market expectations for holiday quarter sales and profit on Wednesday and announced plans to shut 970 of its Family Dollar stores because the retailer tries to revitalize struggling business.
Shares of the corporate fell 14% premarket after the corporate also forecast 2024 revenue and profit that were below expectations.
Dollar stores struggled after consumer spending shifted from higher-margin consumer goods to lower-margin staples. They also face stiff competition from rivals equivalent to Walmart and Chinese e-commerce platform Temu.
“Our biggest problem right now is getting enough merchandise into stores quickly enough for the consumer to respond,” said CEO Rick Dreiling, adding that Family Dollar continues to suffer from macroeconomic uncertainties.
In November, Dollar Tree said it might review its Family Dollar store and potentially close underperforming stores to regain growth.
The company, which operates about 16,774 stores, said it might close about 600 Family Dollar stores in the primary half of fiscal 2024 and 370 more and 30 Dollar Tree stores over a period of several years as their leases expire.
As a result, the corporate recorded a $594.4 million charge for a portfolio optimization review, a $1.07 billion goodwill impairment charge and $950 million in other asset impairments through the quarter -dollars.
“There are a lot of investors who don’t like to see so many fees,” said Joseph Feldman, an analyst at Telsey Advisory Group.
Dollar Tree reported a net lack of $1.71 billion, or $7.85 per share, for the quarter ended Feb. 3, compared with a year-ago profit of $452.2 million, or $2.04 per share.
According to LSEG data, 2024 revenue is predicted to be between $31 billion and $32 billion, with the midpoint below the estimate of $31.65 billion.
Full-year earnings are expected to be between $6.70 and $7.30 per share, with the midpoint barely below expectations of $7.04 per share.
