Dollar Tree Falls on Earnings Miss, Store Closings, and Lower-Than-Expected Guidance

Dollar Tree (DLTR) shares plunged 8% in pre-market trading Wednesday as the discount retailer posted fourth-quarter results that missed estimates and announced plans to close 1,000 stores over the next several years.

The retailer, which operates its namesake brand and Family Dollar locations, posted an overall fourth quarter loss as it recorded over $2.61 billion in charges for the quarter, including goodwill impairment charges and nearly $600 million on its store portfolio review.

When adjusted for those charges, Dollar Tree reported net income of $555.7 million and earnings per share (EPS) of $2.55, both below analyst estimates compiled by Visible Alpha.

Dollar Tree also announced it will close 600 Family Dollar locations in the first half of the 2024 fiscal year, as well as another 370 Family Dollar and 30 Dollar Tree locations that will close once current leases on the locations end “over the next several years,” for a total of 1,000 Family Dollar and Dollar Tree closures over that time frame.

The closures will result in an overall net negative number of stores in the next few years, as the retailer opened 219 new stores in the fourth quarter for a total of 641 for the full fiscal year. Dollar Tree said it operated 16,774 stores as of early February.

Dollar Tree posted a $594.4 million charge related to its portfolio review to find underperforming stores, and did not buy back any shares of its own stock in the fourth quarter. The store also reduced the value of some of its assets, including the Family Dollar name by some $950 million, as well as taking a goodwill impairment charge to the Family Dollar brand of $1.07 billion.

For the full fiscal year, Dollar Tree bought back $504.3 million in its own stock, and still has $1.35 billion allotted to buy back more in the future, but did not include plans to do so in its 2024 guidance.

In the 2024 fiscal year, Dollar Tree projected an increase in sales with a range of $31 billion to $32 billion, and a full-year EPS of $6.70 to $7.30. In the current quarter, Dollar Tree projected $7.6 billion to $7.9 billion in sales, with an EPS of $1.33 to $1.48, below analyst estimates.

Dollar Tree shares were down 8% at $137.78 in pre-market trading Wednesday following the release.