DollarTree (DLTR) closed down over 22% after announcing Q2 results today. The company missed Q2 earnings, and slashed 2024 forecast.
Interestingly, avg revenue increased, but avg margin decreased.
Higher costs at Family Dollar?
Higher costs at Dollar Tree stores?
Both?
Inflation effect?
I occasionally shop at a DollarTree store. Two different locations visited recently have had break-ins (door or front panel glass boarded up). Feel bad for the stores and the employees. I would guess if break-ins were a more frequent case, DLTR would likely have mentioned it.
Other ideas in my port are getting beaten up (but usually not a 22% one-time hit), so maybe I will keep DLTR on my radar.
We continue to hear that inflation is raising costs faster than income increases. Low end customers are reacting by being more selective in what they buy. Dollar stores tend to serve low end customers.
No doubt one day–maybe when interest rates start to fall–the company will resume its profitable activities. For now the future is uncertain. Will there be a recession? If so more bad news ahead. But otherwise could be good time to buy. Maybe wait for a bottom is you can spot one (correctly). No easy trick as more bad news is likely at least through end of the year. Maybe next April will see a turn around with Easter sales.
I am not there… but I am getting closer to the point that drug stores, dollar stores are un-investable. I need to find a way to close the positions with minimal loss and move on.
If it is short time sure, but a long term short is difficult. That’s for institutional investors. Also, after such a massive decline ( $260 to 80, i.e 70% ) shorting is bad.
With a former rival, 99c Stores, no longer in business, I think there is a market for DLTR. I haven’t visited a Family Dollar location in many years. IIRC, while the chain sold similar items, some of the SKUs were multi-packs i.e. drinks in 6-packs, items in multi-packs (but not quite Costco).
I guess, if I have any serious intentions on DLTR, I should probably visit the other flavor of the brand.
@Kingran - Well, we might have to agree to disagree - But, IMO, 99c Stores did go out of business.
In the case of my local 99c Store, the physical refrigerator sections and all the shelves were removed from the store. At least to me, that’s a definite “gone out of business” indication.
Yes,
Dollar Tree
As part of the transactions, Dollar Tree also acquired the North American Intellectual Property of 99 Cents Only Stores and select on-site furniture, fixtures, and equipment. May 29, 2024
You are correct they did go out of business or bankrupt. Dollar tree bought only select store leases and will be rebranding those locations to Dollar Tree.
Sorry for the confusion. I am so stuck on the DLTR store expansion, I completely missed the main fact
