Dollar Tree plummets 17% after slashing its profit forecast over trade-war issues
Shares of the discount retailer fell as much as 17% Tuesday after the company reported disappointing third-quarter earnings and lowered its full-year guidance due to uncertainty around the trade war and tariffs. Adjusted earnings per share:Same-store sales:Dollar Tree lowered both its fourth-quarter and full-year guidance due to the potential impact of tariffs. For the full year, Dollar Tree expects earnings per share to be between $4.66 and $4.
It now forecasts fourth quarter earnings per share between $1.70 and $1.80, where analysts expected $1.94 per share. Dollar Tree expects that tariffs placed on Chinese imports, if fully implemented, will boost cost of goods sold by approximately $19 million in the fourth quarter. That means earnings per diluted share will fall about 6 cents, the company expects. It remains undetermined whether a new tariff increase will take place on December 15.
"Fiscal 2019 has been a unique year as the result of several factors," including the global helium shortage and continued uncertainty regarding trade and the related tariffs, said Gary Philbin, Dollar Tree's CEO,The company also said that increased sales of lower-margin goods and higher freight and distribution costs negatively affected gross margin, which sank to 29.7% in the quarter from 30.2% a year earlier.
As the trade war between the US and China continues on, retailers and consumers are still caught in the crosshairs. A recent report from the New York Federal Reserve showed that increased tariffs on China areDollar Tree has a consensus price target of $116.20 and 16"buy" ratings, 10"hold" ratings, and one"sell" rating, according to Bloomberg data.
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