Why Dollar Tree Stock Is Falling Today

The dollar tree (DLTR -24.51%) the stock is crushed in trading on Wednesday. The discount retailer’s stock price was down 24% as of 2:02 p.m. ET, according to data from S&P Global Market Intelligence.

Before the market opened Wednesday morning, Dollar Tree released results for its fiscal second quarter, which ended Aug. 3. Sales and earnings fell below analysts’ consensus expectations, and management cut its full-year guidance.

Dollar Tree is taking a big loss of earnings

Dollar Tree posted non-GAAP (adjusted) earnings per share of $0.67 on sales of $7.38 billion. Wall Street expectations had called for adjusted earnings per share of $1.04 on revenue of $7.48 billion.

Business same-store sales increased 0.7% year-over-year, Dollar Tree same-store sales increased 1.3%, and Family Dollar same-store sales decreased 0. 1% Total revenue rose about 0.7%, but adjusted earnings per share fell 26.4%. The company continued to face some macroeconomic headwinds, and store opening expenses and legal liability costs also weighed on the bottom line.

Large guide cuts

For the fiscal third quarter, Dollar Tree expects sales of $7.4 billion to $7.6 billion. Adjusted earnings per share for the quarter are expected to be between $1.05 and $1.15.

For the full fiscal year, Dollar Tree now expects revenue between $30.6 billion and $30.9 billion. Management had previously estimated annual sales to be between $31 billion and $32 billion. Adjusted earnings per share are expected to be between $5.20 and $5.60, a big step down from management’s previous guidance range of $6.50 to $7.

In addition to the weaker-than-anticipated second-quarter performance and lower sales outlook for the year, the company cited costs of about $0.12 per share resulting from the acquisition and reopening of 99 Cents Only Stores as reasons for downward revision of earnings guidance.