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CBS News
2 days ago
- Business
- CBS News
Dollar Tree says U.S. tariffs could cut its second-quarter profits in half
Dollar Tree, a chain of discount stores, warned Wednesday that President Trump's import tariffs could lower its second-quarter earnings by as much as 50% compared to the year-ago period. The Chesapeake, Virginia-based retailer sources most of its inventory, which ranges from disposable tableware, party supplies and toys to puzzles and clothing, from China, making it vulnerable to higher U.S. tariffs on the Asian economic giant. Mr. Trump earlier this year imposed tariffs of 145% on Chinese imports, claiming Beijing hasn't taken sufficient steps to stem the flow of fentanyl into the U.S., before lowering the rate last month to 30% as the sides discuss trade issues. Even at the reduced rate, some businesses say the levies would make importing Chinese-made goods prohibitively expensive. Dollar Tree CEO Mike Creedon said in an earnings call with Wall Street analysts on Wednesday that he expects the tariffs to hurt the company's earnings in the near-term. "We are actively engaged on multiple fronts to mitigate the impact of inflationary cost pressures including tariffs," he added, while acknowledging that "the tariff landscape is highly fluid and changing week to week." The company is leveraging its relationships with suppliers to keep its costs as low as possible, Creedon noted. "Given the volatility of today's operating environment, it is challenging to predict with precision the near-term performance of the business in Q2 — especially regarding tariff and other cost-mitigation efforts," he said. The company's second-quarter earnings per share could drop by as much as 50% compared to the same period a year earlier, according to Dollar Tree. The company forecast its earnings to rebound in the third and fourth quarters as it expects being able to "mitigate most of the incremental margin pressure from higher tariffs and other input costs" for the whole year, Dollar Tree said in a statement. For the first quarter, the retail chain posted revenue of $4.6 billion and said it expects 2025 earnings in the range of $5.15 to $5.65 per share. It expects full-year revenue of between $18.5 billion and $19.1 billion. Dollar Tree said on Wednesday's call that higher-income customers have driven growth across its more than 15,500 store locations, a sign its prices are appealing to a broad range of consumers look for deals. The business has also sold its Family Dollar chain store brand in a deal it expects will close this summer. The $1 billion sale of Family Dollar to two private equity firms will allow Dollar Tree to "sharpen its operational focus" and generate cash flow, Creedon said.
Yahoo
2 days ago
- Business
- Yahoo
Dollar Tree (NASDAQ:DLTR) Surprises With Q1 Sales, Provides Optimistic Revenue Guidance for Next Quarter
Discount treasure-hunt retailer Dollar Tree (NASDAQ:DLTR) reported revenue ahead of Wall Street's expectations in Q1 CY2025, but sales fell by 39.2% year on year to $4.64 billion. The company expects next quarter's revenue to be around $7.67 billion, coming in 74.6% above analysts' estimates. Its non-GAAP profit of $1.26 per share was 4.5% above analysts' consensus estimates. Is now the time to buy Dollar Tree? Find out in our full research report. Revenue: $4.64 billion vs analyst estimates of $4.53 billion (39.2% year-on-year decline, 2.4% beat) Adjusted EPS: $1.26 vs analyst estimates of $1.21 (4.5% beat) Adjusted EBITDA: $535.2 million vs analyst estimates of $528.3 million (11.5% margin, 1.3% beat) The company reconfirmed its revenue guidance for the full year of $18.8 billion at the midpoint Management raised its full-year Adjusted EPS guidance to $5.40 at the midpoint, a 2.9% increase Operating Margin: 8.3%, up from 5.5% in the same quarter last year Free Cash Flow Margin: 2.8%, similar to the same quarter last year Locations: 16,607 at quarter end, up from 16,397 in the same quarter last year Same-Store Sales rose 5.4% year on year (1% in the same quarter last year) Market Capitalization: $20.33 billion 'Our strong first quarter performance underscores the progress we've made against our strategic priorities and is a clear signal that our customers are responding positively to the changes we are making,' said Mike Creedon, Chief Executive Officer. A treasure hunt because there's no guarantee of consistent product selection, Dollar Tree (NASDAQ:DLTR) is a discount retailer that sells general merchandise and select packaged food at extremely low prices. A company's long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. With $24.59 billion in revenue over the past 12 months, Dollar Tree is one of the larger companies in the consumer retail industry and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because there is only so much real estate to build new stores, placing a ceiling on its growth. To accelerate sales, Dollar Tree likely needs to optimize its pricing or lean into international expansion. As you can see below, Dollar Tree grew its sales at a sluggish 1.1% compounded annual growth rate over the last six years (we compare to 2019 to normalize for COVID-19 impacts) as its store footprint remained unchanged. This quarter, Dollar Tree's revenue fell by 39.2% year on year to $4.64 billion but beat Wall Street's estimates by 2.4%. Company management is currently guiding for a 4% year-on-year increase in sales next quarter. Looking further ahead, sell-side analysts expect revenue to decline by 21.7% over the next 12 months, a deceleration versus the last six years. This projection is underwhelming and indicates its products will see some demand headwinds. Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend. A retailer's store count influences how much it can sell and how quickly revenue can grow. Dollar Tree listed 16,607 locations in the latest quarter and has kept its store count flat over the last two years while other consumer retail businesses have opted for growth. When a retailer keeps its store footprint steady, it usually means demand is stable and it's focusing on operational efficiency to increase profitability. The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales is an industry measure of whether revenue is growing at those existing stores and is driven by customer visits (often called traffic) and the average spending per customer (ticket). Dollar Tree's demand has been healthy for a retailer over the last two years. On average, the company has grown its same-store sales by a robust 3.1% per year. Given its flat store base over the same period, this performance stems from not only increased foot traffic at existing locations but also higher e-commerce sales as demand shifts from in-store to online. In the latest quarter, Dollar Tree's same-store sales rose 5.4% year on year. This growth was an acceleration from its historical levels, which is always an encouraging sign. It was great to see Dollar Tree raise its full-year EPS guidance and beat Wall Street's revenue, EPS, and EBITDA estimates. On the other hand, its full-year revenue guidance slightly missed. Overall, we think this was a decent quarter with some key metrics above expectations. Investors were likely hoping for more, and shares traded down 2.8% to $93.94 immediately after reporting. Is Dollar Tree an attractive investment opportunity at the current price? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free. 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
Wall Street Journal
2 days ago
- Business
- Wall Street Journal
Dollar Tree Stock Falls After Retailer Warns of Tariff Pressure
Dollar Tree warned that tariffs will create near-term pressure, but remains optimistic about long-term prospects. The stock dropped as much as 10% Wednesday morning. The discount-retail chain ran up about $70 million of extra costs while the U.S. had 145% levies on Chinese goods, said Chief Financial Officer Stewart Glendinning. He said profit this quarter would be "meaningfully lower than last year in light of higher tariffs and other costs." Dollar Tree is partly managing rising costs by negotiating with suppliers and buying products from different countries. With these actions, the company offset about 90% of the first round of tariffs, said Mike Creedon, the company's chief executive. It is working through addressing the latest round.
Yahoo
2 days ago
- Business
- Yahoo
Dollar Tree expects to take profit hit from tariffs, shares drop on outlook
Dollar Tree cautioned investors that tariffs and price volatility could result in a profit decline of up to 50% in the current quarter. The discount retail chain said on Wednesday, June 4, that adjusted profit during the second quarter, which ends Aug. 2, could be down as much as 45% to 50% compared to a year ago. "Given the volatility of today's operating environment, it is challenging to predict with precision the near-term performance of the business in Q2, especially regarding tariff and other cost mitigation efforts," said Dollar Tree CEO Mike Creedon in a call with investment analysts Wednesday. For the full year, Dollar Tree assumes it "will be able to mitigate most, if not all of the potential earnings impact from higher tariffs, assuming the current levels remain in place," he said. National Donut Day 2025 deals: Get free food at Dunkin', Krispy Kreme, more Dollar Tree was able to offset 90% of the first round of 10% tariffs, which President Donald Trump announced in April, during the first quarter, Creedon said. However, some purchases made when tariffs on goods from China were 145% will be absorbed during the current quarter, chief financial officer Stewart Glendinning said during the call. Those tariffs will result in increased costs of about $70 million during the second quarter, he said. Shares of the discount retail chain fell about 8% in early trading on Wednesday, June 4. To deal with tariffs, company said it is negotiating with suppliers, opting for new products or dropping products, buying them from other countries or raising prices – since its multi-price format, initiated in March 2024, allows for prices up to $7. "The tariff landscape is highly fluid and changing week to week, so we are focused on agility and on improving that agility," Creedon said. Dollar Tree also saw signs of consumer concerns about prices and volatility as the company reported an increase of 2.6 million new customers, a majority with household incomes of $100K or more, Creedon said. "We believe we've got a unique opportunity here, as these new customers find us," he said. "We want to create a great first impression for that customer. We want to create a sticky relationship with that customer for years and years to come." Dollar Tree said net sales increased 11.3% to $4.6 billion during the first quarter, which ended May 3. That surpassed the $4.5 billion expected by analysts polled by S&P Global Market Intelligence. Same-store sales increased 5.4% during the period, with store traffic up 2.5% increase. Shoppers spent 2.8% more, on average, per transaction, the company said. Dollar Tree opened a total of 148 new Dollar Tree stores during the quarter – including its 9,000th store, located in Plano, Texas – and finished the quarter with 9,016 open stores. The company plans to open about 400 new Dollar Tree locations during the year, not including 57 Dollar Tree-Family Dollar combo stores that will be converted to Dollar Tree stores. Contributing: Reuters. Mike Snider is a reporter on USA TODAY's Trending team. You can follow him on Threads, Bluesky, X and email him at mikegsnider & @ & @mikesnider & msnider@ What's everyone talking about? Sign up for our trending newsletter to get the latest news of the day This article originally appeared on USA TODAY: Dollar Tree: Tariffs will impact profit in current quarter Connectez-vous pour accéder à votre portefeuille
USA Today
2 days ago
- Business
- USA Today
Dollar Tree expects to take profit hit from tariffs, shares drop on outlook
Dollar Tree expects to take profit hit from tariffs, shares drop on outlook Show Caption Hide Caption Gap shares tumble as retailer warns of tariff toll on profits Gap shares fell 20% in early trading on Friday after the Old Navy owner warned that U.S. tariffs would squeeze this year's profit, even as the apparel maker aims to soften the blow by diversifying its supply chain and investing in U.S. cotton. Dollar Tree cautioned investors that tariffs and price volatility could result in a profit decline of up to 50% in the current quarter. The discount retail chain said on Wednesday, June 4, that adjusted profit during the second quarter, which ends Aug. 2, could be down as much as 45% to 50% compared to a year ago. "Given the volatility of today's operating environment, it is challenging to predict with precision the near-term performance of the business in Q2, especially regarding tariff and other cost mitigation efforts," said Dollar Tree CEO Mike Creedon in a call with investment analysts Wednesday. For the full year, Dollar Tree assumes it "will be able to mitigate most, if not all of the potential earnings impact from higher tariffs, assuming the current levels remain in place," he said. National Donut Day 2025 deals: Get free food at Dunkin', Krispy Kreme, more Dollar Tree was able to offset 90% of the first round of 10% tariffs, which President Donald Trump announced in April, during the first quarter, Creedon said. However, some purchases made when tariffs on goods from China were 145% will be absorbed during the current quarter, chief financial officer Stewart Glendinning said during the call. Those tariffs will result in increased costs of about $70 million during the second quarter, he said. Shares of the discount retail chain fell about 8% in early trading on Wednesday, June 4. Dollar Tree: Tariff situation 'highly fluid' To deal with tariffs, company said it is negotiating with suppliers, opting for new products or dropping products, buying them from other countries or raising prices – since its multi-price format, initiated in March 2024, allows for prices up to $7. "The tariff landscape is highly fluid and changing week to week, so we are focused on agility and on improving that agility," Creedon said. Dollar Tree also saw signs of consumer concerns about prices and volatility as the company reported an increase of 2.6 million new customers, a majority with household incomes of $100K or more, Creedon said. "We believe we've got a unique opportunity here, as these new customers find us," he said. "We want to create a great first impression for that customer. We want to create a sticky relationship with that customer for years and years to come." Dollar Tree said net sales increased 11.3% to $4.6 billion during the first quarter, which ended May 3. That surpassed the $4.5 billion expected by analysts polled by S&P Global Market Intelligence. Same-store sales increased 5.4% during the period, with store traffic up 2.5% increase. Shoppers spent 2.8% more, on average, per transaction, the company said. Dollar Tree opened a total of 148 new Dollar Tree stores during the quarter – including its 9,000th store, located in Plano, Texas – and finished the quarter with 9,016 open stores. The company plans to open about 400 new Dollar Tree locations during the year, not including 57 Dollar Tree-Family Dollar combo stores that will be converted to Dollar Tree stores. Contributing: Reuters. Mike Snider is a reporter on USA TODAY's Trending team. You can follow him on Threads, Bluesky, X and email him at mikegsnider & @ & @mikesnider & msnider@ What's everyone talking about? Sign up for our trending newsletter to get the latest news of the day
