11/26/2019

Dollar Tree Inc on Tuesday forecast holiday-quarter profit below Wall Street expectations, as the discount store operator expects a hit from U.S. tariffs on Chinese imports, sending its shares down about 8% before the opening bell.

The tariffs as part of the prolonged trade war between Washington and Beijing have been a pressure point for retailers, which source a large chunk of their merchandise from China.

The company said it expects fourth-quarter profit in the range of $1.70 to $1.80 per share, below the average analyst expectation of $2.02.

Dollar Tree also said it expects fourth-quarter merchandise margin to be pressured by higher sales of low-margin consumables and rising wages at its distribution centers.

The company forecast fourth-quarter sales in the range of $6.33 billion to $6.44 billion, the mid-point of which is below the average analyst estimate of $6.41 billion.

Excluding items, the company earned $1.08 per share in the third quarter ended Nov. 2, missing estimate of $1.13.

Net sales rose 3.7% to $5.75 billion, above analysts’ average estimate of $5.74 billion, according to IBES data from Refinitiv.

Same-store sales rose 2.50%, slightly falling short of the average analyst estimate of 2.54%.

Reuters (Reporting by Soundarya J in Bengaluru; Editing by Maju Samuel)