Gary Philbin, CEO, Dollar Tree
Scott Mlyn | CNBC
Dollar Tree missed Wall Street expectations for quarterly sales and profit on Wednesday and laid out plans to shutter 970 of its Family Dollar stores, as the retailer looks to revamp the struggling business.
Shares of the Chesapeake, Virginia-based firm fell about 8% in premarket trading after it also projected annual sales and profit below expectations.
Dollar stores have been struggling to deal with a shift in consumer spending to lower-margin essentials from higher-margin discretionary products like home decor, electronics and toys. They also face stiff competition from rivals such as Walmart and Chinese e-commerce platform Temu.
In November, Dollar Tree had said it would be reviewing its Family Dollar business, including potentially shutting down underperforming stores, to return to growth.
The discount store chain said it would close about 600 Family Dollar stores in the first half of fiscal year 2024 and 370 more over a period of a few years along with 30 Dollar Tree outlets, as their lease terms expire.
The company took a $594.4 million charge for a portfolio optimization review and incurred a goodwill impairment charge of $1.07 billion, as well as $950 million in other asset impairment charges in the reported quarter.
As a result, it reported a net loss of $1.71 billion, or $7.85 per share in the fourth quarter ended Feb. 3, compared with a year-ago profit of $452.2 million, or $2.04 per share.
On an adjusted basis, the company earned $2.55 per share, compared to an estimate of $2.65, according to LSEG data.
It posted quarterly net sales of $8.63 billion, below analysts’ estimate of $8.67 billion.
For the full year, Dollar Tree expects sales between $31 billion and $32 billion, the mid-point of which is below analysts’ estimate of $31.65 billion.
It expects 2024 profit between $6.70 and $7.30 per share, the mid-point of which is slightly below analysts’ estimate of $7.04 per share.
Sumber: www.cnbc.com
