Latest news with #ArunSundaram
Yahoo
a day ago
- Business
- Yahoo
Dollar Tree warns of Q2 profit hit over tariffs: Value retail stocks
Discount retailer Dollar Tree (DLTR) beat earnings estimates for its first quarter, while warning investors that its profits could drop by 50% in the second quarter due to tariffs. Arun Sundaram, senior equity research analyst at CFRA Research, joins Market Domination to break down the pressure on retailer's margins and why Walmart (WMT) stands out in the industry with margin growth and new revenue streams. To watch more expert insights and analysis on the latest market action, check out more Market Domination here. We're switching to another sector of retail. Dollar Tree reporting earnings this morning, beating on the top and bottom line, but the stock is sinking, the discount store warning investors that a second quarter profit could be down as much as 50% from a year earlier due to tariffs. It's a theme we've been seeing across the sector this earning season. We're now getting how to find value among value retailers with the Yahoo Finance Playbook, joining us now is Arun Sundaram, a senior equity research analyst at CFRA Research. Arun, thank you so much for being with us. It's good to see you. Let's start with Dollar Tree there, and I guess perhaps contrasted versus Dollar General, which made a very different um, you know, had a different very different earnings report related to tariffs, it's commentary around tariffs. So, tell us what's going on with those two. Yeah, yeah. I think, um, you know, overall, in the past two days, both companies had pretty um, uh, solid, uh, earnings. Uh, Q1, Q1 results are generally solid for both Dollar General and, and Dollar Tree. Uh, we got a positive surprise from Dollar General where they raised their full year, uh, sales and, and EPS outlook and, and, and, in this quarter actually we haven't seen many retailers raise their, raise their outlook given, you know, all the tariff uncertainties, but uh, uh, Dollar General was an exception here and they did raise their full year, uh, sales and EPS outlook. Uh, for Dollar Tree, um, you know, they had a solid quarter as well, but they did, they did call out that Q2 is going to be, uh, uh, exceptionally soft quarter, and a lot of that has to do with the fact that um, they did buy inventory from China when, when tariffs are 145%. So, they have to work through that inventory in Q2, um, and that's going to hurt margins, um, but the expectation is by Q3 and Q4 of this year, um, you know, they'll, they'll bounce back and, and they're still expecting to hit their, uh, their full year, uh, earnings outlook. So they really have it, they did raise their, Dollar Tree did raise their EPS outlook for the full year, but um, that was mostly due to share purchases more than, you know, really any fundamental change. And so Arun, you got a hold on Dollar General and, and Dollar Tree. Let, let's talk about when you have a buy on, and that would be Walmart. How come, or how come you tell clients this one's a buy, this one's moving higher? Yeah, I mean, I mean, I mean just there's a lot of, of good things to say about Walmart right now. You know, Walmart's a much more diversified company, they have uh, large presence in the US, they own a club business, Sam's Club. Uh, they also have a very large international presence. Um, you know, right now, I think Walmart is taking market share from, from most retailers, especially in, in the general merchandise space. Uh, Walmart we think is, is gaining more of those higher income households. Why? Because, uh, they have a pretty robust subscription program, Walmart Plus. Uh, and that's pairing really nicely with their growing e-commerce business. Um, and really Walmart's been, you know, kind of taking, taking a, a page from, from Amazon's Playbook and it's, and it's working out for them. Um, and, and, uh, another thing that we like about Walmart is that they're growing these new, new revenue streams at Walmart, things like advertising revenue, third-party fulfillment services. Um, uh, those, those revenue streams are much higher margin revenue streams and it allows Walmart to reinvest in the business in areas like lowering prices for its customers or increasing wages for his employees. Um, so they can really, you know, reward shareholders uh, as well as, you know, uh, uh, their customers as well. So we do, we do see Walmart, you know, expanding their operating margins over the next uh, few years. And um, you know, when you're a company with, you know, 500 billion plus in revenue that uh, you know, every basis point of operating margin expansion, you know, translates into, uh, to pretty decent earnings growth. Arun again, um, maybe instructive here to sort of compare and contrast. You mentioned um, Sam's Club that Walmart owns, then you also have BJs, of course, trades as a standalone, you have Costco that trades as a standalone in terms of those warehouse clubs. So, among value uh, retailers, how do you think about those three and where investors maybe should be looking? Yeah, I mean we really like the entire club channel. Uh, yeah, we have a buy rating on, on BJ's wholesale, we have a buy rating on Costco and we buy rating on Walmart who owns uh, Sam's Club. And all three of those club stores are a little bit differentiated. Uh, BJs is, you know, they focus more on, in the grocery space. In fact if you ask BJs, you know, they, they would probably say their number one competitor are, are, you know, traditional supermarkets. Uh, not necessarily Costco or Sam's Club. Um, because they don't, you know, they focus more in that, in the grocery space and in smaller pack sizes. Uh, then you have Costco, you know, which really is kind of dominating the club space with industry leading, you know, growth. They're, um, you know, they're, they're more exposed to more of that, you know, affluent higher income customer. They're growing their membership well. Um, and then you have Sam's Club as well, uh, who's also, you know, growing their membership. I think a lot right now, the, this generation, a lot of Millennials are, are, are going to that, the club model, especially as, you know, Millennials get married and have kids. Um, so I think that club channel has a lot of room for growth um, over the next, you know, several years. We, we see both, we see all three retailers, Costco, BJs, and Sam's Club all expanding their footprint uh, across the United States over the next several years. Arun, always good to see you. Appreciate that your time and those picks. Thank you. Thank you.
Business Insider
2 days ago
- Business
- Business Insider
CFRA upgrades Dollar General (DG) to a Hold
In a report released today, Arun Sundaram from CFRA upgraded Dollar General (DG – Research Report) to a Hold, with a price target of $118.00. The company's shares closed today at $112.57. Confident Investing Starts Here: Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter According to TipRanks, Sundaram is a 3-star analyst with an average return of 8.0% and a 63.16% success rate. Dollar General has an analyst consensus of Moderate Buy, with a price target consensus of $97.20, representing a -13.65% downside. In a report released today, Telsey Advisory also initiated coverage with a Hold rating on the stock with a $100.00 price target. Based on Dollar General's latest earnings release for the quarter ending January 31, the company reported a quarterly revenue of $10.3 billion and a net profit of $191.22 million. In comparison, last year the company earned a revenue of $9.86 billion and had a net profit of $401.81 million Based on the recent corporate insider activity of 38 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of DG in relation to earlier this year. Most recently, in April 2025, EMILY C TAYLOR, the EVP & Chief Merchandising Ofc of DG sold 809.00 shares for a total of $76,620.39.
New York Post
28-05-2025
- Business
- New York Post
How shoppers are exploiting return policies — and costing retailers billions
Shoppers are increasingly exploiting return policies with various scams to defraud companies, and it is costing retailers billions. While retailers have tried to mitigate returns, they amounted to $743 billion in 2023. Of that, about $101 billion was fraudulent, according to the National Retail Federation. This problem is getting more sophisticated as shoppers grow increasingly duplicitous, such as returning empty boxes, using fake or altered receipts, or ripping key components from electronics before returning the item. The challenge for retailers is how to crack down and limit return polices without alienating customers. Blue Yonder's 2024 Consumer Retail Returns Survey found that more than 90% of respondents admitted that a lenient return policy influences their buying decisions. Additionally, stricter policies are deterring many shoppers, particularly Gen Z and millennials, from making purchases at all. Arun Sundaram, vice president and senior equity analyst at CFRA Research, told FOX Business that return fraud remains an issue for retailers, particularly because of the 'growth of e-commerce and the flexible return policies that often come with it.' 4 Shoppers are increasingly exploiting return policies with various scams to defraud companies, and it is costing retailers billions. Getty Images This type of fraud not only puts pressure on margins but disrupts inventory planning and drives up operating costs, according to Sundaram. 'In recent years, we've seen many retailers ramp up investments in data and analytics to detect patterns and flag suspicious return activity. Still, striking the right balance between preventing fraud and keeping a positive customer experience is an ongoing challenge,' Sundaram added. Gaurav Saran, CEO of told FOX Business that companies started offering competitive return policies such as free returns and 30- or 60-day return policies as shoppers became more reliant on online shopping. In turn, it encouraged more shoppers to buy from the brand, but it also paved the way for a select few to take advantage of the situation. 4 This problem is getting more sophisticated as shoppers grow increasingly duplicitous, such as returning empty boxes, using fake or altered receipts, or ripping key components from electronics before returning the item. Christopher Sadowski 4 In some cases, customers will return an empty box, claiming the item was missing when they received it. This is known as the 'empty box' scam. AFP via Getty Images One of the most common scams, according to Saran, is 'wardrobing.' Consumers purchase clothing with the intent of returning it after they use it. The issue with this type of fraud is it can be difficult to detect, though it is one of the most common problems that clothing retailers have, according to website. In some cases, customers will return an empty box, claiming the item was missing when they received it. This is known as the 'empty box' scam. Retailers that don't weigh packages before processing returns may not notice the fraud until after the customer has already been refunded, according to Saran. Another tactic his company has noticed is called 'bricking.' This is when someone removes key components from electronics before returning the item. While the product looks intact on the outside, it is useless. Retailers that don't check returned items carefully can end up selling worthless goods. 4 If there appears to be fraudulent activity, the company will be notified and can adjust its return policy specific to a customer. Getty Images Saran's developed an end-to-end return management system to mitigate these crimes by helping companies configure return processing and even handle repairs. It helps companies ensure that what a customer said they were going to return and the condition they are returning it in are in line with the return policy. If there appears to be fraudulent activity, the company will be notified and can adjust its return policy specific to a customer. He works with various companies, including Brooks, Wilson, and Samsonite.
Yahoo
15-05-2025
- Business
- Yahoo
Walmart's warning for pricier baby strollers, electronics, and toys could be bad news for Best Buy, Mattel, and others
Walmart's (WMT) tariff warning on Thursday could be a red flag for the fortunes of other retailers. "More discretionary retailers may face a murkier outlook than Walmart," CFRA analyst Arun Sundaram told Yahoo Finance. "Given how fluid the tariff situation is, we may even see some of these retailers pull guidance altogether." America's largest retailer reported mixed numbers in its first quarter report on Thursday and said tariffs have already led to price increases in April and May. It reiterated its fiscal year guidance and said it expects net sales for the second quarter to increase 3.5% to 4.5%. However, it did not provide guidance for adjusted earnings or operating income for Q2. "A lot of the price increases that we've talked about with tariffs have not taken effect yet. We'll begin to see some of this as we get into the back half of May ... then also in a more pronounced fashion in June," CFO John David Rainey told Yahoo Finance (video above). Categories most impacted include electronics, toys, vacuum cleaners, baby strollers, and car seats, he said. Read more: What Trump's tariffs mean for the economy and your wallet Walmart is sending a warning signal to Wall Street that "the full impact of tariffs probably haven't been actually flowing through the economy yet," Morningstar analyst Noah Rohr told Yahoo Finance. The recent pullbacks by the Trump administration won't be enough to alleviate the effects. Tariffs on China have dropped from 145% to 30%, while so-called reciprocal tariffs have been suspended for a 10% universal duty, but rates are still much higher than historically. That could mean 2025, especially the back-to-school season, may not be as strong as retailers had hoped, especially for chains like Best Buy (BBY). About 55% of what Best Buy sells is sourced through China, and another 20% comes from Mexico. Its shares have tanked 15% this year. Entering 2025, many on the Street were optimistic that Best Buy would be boosted by the replacement cycle kicking in around laptops, notebooks, and phones as AI features ramp up and consumers upgrade after the pandemic spending spree of 2020. Rohr said it's "probably fair to assume that prices for those electronics and appliances and things will go up and potentially delay the replacement cycle ... that will persist at least in the near term." In early March when tariffs on China were 20%, Best Buy CEO Corie Barry said on the company's earnings call that if the initial 10% tariff on China were to stay in effect, it would have a "negative impact in the ballpark of 1 point of comparable sales." The second quarter to fourth quarter results would show the brunt of that, she said. Parents could also feel the brunt. Rainey pointed out baby strollers and car seats as a category where prices would be increasing. 97% of strollers and 87% of car seats are made in China, per baby registry website Babylist. Newell Brands (NWL), which is behind the Graco brand, is navigating the situation carefully, according to Reuters. Its stock has plunged 40% year to date. Toy maker Mattel's (MAT) CEO Ynon Kreiz told Yahoo Finance his company will aim to raise prices in the US and move production out of China to other countries with lower tariffs. As Brian Sozzi reported, the company currently relies on China to produce less than 40% of its toys but also imports from Indonesia, Malaysia, Mexico, and Thailand. Target (TGT) is also in the hot seat. It imports about half of its US sales, which includes products from China. "In terms of our owned brand production, we've reduced what we source from China from roughly 60% in 2017 to around 30% today and on our way to less than 25% by the end of next year," Target chief commercial officer Rick Gomez told investors last quarter. Morningstar's Rohr said the "second and third quarter will be interesting to watch," especially given Target's exposure to highly discretionary items, with the first quarter likely already showing that retail is "under pressure." Its stock has dropped 30% in 2025. — Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@ Click here for all of the latest retail stock news and events to better inform your investing strategy Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
15-05-2025
- Business
- Yahoo
Walmart's warning for pricier baby strollers, electronics, and toys could be bad news for Best Buy, Mattel, and others
Walmart's (WMT) tariff warning on Thursday could be a red flag for the fortunes of other retailers. "More discretionary retailers may face a murkier outlook than Walmart," CFRA analyst Arun Sundaram told Yahoo Finance. "Given how fluid the tariff situation is, we may even see some of these retailers pull guidance altogether." America's largest retailer reported mixed numbers in its first quarter report on Thursday and said tariffs have already led to price increases in April and May. It reiterated its fiscal year guidance and said it expects net sales for the second quarter to increase 3.5% to 4.5%. However, it did not provide guidance for adjusted earnings or operating income for Q2. "A lot of the price increases that we've talked about with tariffs have not taken effect yet. We'll begin to see some of this as we get into the back half of May ... then also in a more pronounced fashion in June," CFO John David Rainey told Yahoo Finance (video above). Categories most impacted include electronics, toys, vacuum cleaners, baby strollers, and car seats, he said. Read more: What Trump's tariffs mean for the economy and your wallet Walmart is sending a warning signal to Wall Street that "the full impact of tariffs probably haven't been actually flowing through the economy yet," Morningstar analyst Noah Rohr told Yahoo Finance. The recent pullbacks by the Trump administration won't be enough to alleviate the effects. Tariffs on China have dropped from 145% to 30%, while so-called reciprocal tariffs have been suspended for a 10% universal duty, but rates are still much higher than historically. That could mean 2025, especially the back-to-school season, may not be as strong as retailers had hoped, especially for chains like Best Buy (BBY). About 55% of what Best Buy sells is sourced through China, and another 20% comes from Mexico. Its shares have tanked 15% this year. Entering 2025, many on the Street were optimistic that Best Buy would be boosted by the replacement cycle kicking in around laptops, notebooks, and phones as AI features ramp up and consumers upgrade after the pandemic spending spree of 2020. Rohr said it's "probably fair to assume that prices for those electronics and appliances and things will go up and potentially delay the replacement cycle ... that will persist at least in the near term." In early March when tariffs on China were 20%, Best Buy CEO Corie Barry said on the company's earnings call that if the initial 10% tariff on China were to stay in effect, it would have a "negative impact in the ballpark of 1 point of comparable sales." The second quarter to fourth quarter results would show the brunt of that, she said. Parents could also feel the brunt. Rainey pointed out baby strollers and car seats as a category where prices would be increasing. 97% of strollers and 87% of car seats are made in China, per baby registry website Babylist. Newell Brands (NWL), which is behind the Graco brand, is navigating the situation carefully, according to Reuters. Its stock has plunged 40% year to date. Toy maker Mattel's (MAT) CEO Ynon Kreiz told Yahoo Finance his company will aim to raise prices in the US and move production out of China to other countries with lower tariffs. As Brian Sozzi reported, the company currently relies on China to produce less than 40% of its toys but also imports from Indonesia, Malaysia, Mexico, and Thailand. Target (TGT) is also in the hot seat. It imports about half of its US sales, which includes products from China. "In terms of our owned brand production, we've reduced what we source from China from roughly 60% in 2017 to around 30% today and on our way to less than 25% by the end of next year," Target chief commercial officer Rick Gomez told investors last quarter. Morningstar's Rohr said the "second and third quarter will be interesting to watch," especially given Target's exposure to highly discretionary items, with the first quarter likely already showing that retail is "under pressure." Its stock has dropped 30% in 2025. — Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@ Click here for all of the latest retail stock news and events to better inform your investing strategy Sign in to access your portfolio
