Dollar Tree Inc. lowered its full-year guidance as consumers remain cautious in their spending.
Oliver Chen, senior research analyst at TD Cowen, joins BNN Bloomberg to discuss the impact of slowing consumer spending on retail.
The discount chain operator said it now expects comparable sales growth in the low-single-digits, versus the previous forecast of growth in the low-to-middle single digits. That is roughly in line with what Wall Street analysts were anticipating. It also cut its forecast for adjusted earnings. Like its peer Dollar General Inc., Dollar Tree is facing longer-term challenges. Its core customers are under pressure from high inflation and interest rates. While challenging economic times have historically lifted their businesses, dollar stores are now facing heightened competition from Walmart Inc., Aldi Inc. and other retailers focused on low prices. Dollar General shares plunged the most on record last week after slashing its full-year sales forecast.
In response to competition and consumers’ struggles, Dollar Tree has been expanding its assortment to sell products with a greater range of price points, including items that cost as much as $7. The company is experiencing a “meaningful” sales increase at the 1,600 stores that are offering various price points, Chief Executive Officer Rick Dreiling said in a statement.
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