Dollar Tree, the discount retailer (ticker: DLTR), has joined the list of retailers feeling the squeeze on profits due to inventory loss. In its second-quarter earnings report, Dollar Tree revealed earnings of 91 cents per share, surpassing analysts’ estimates of 87 cents. The company also reported revenue of $7.32 billion for the quarter, exceeding the projected $7.2 billion.
Despite this positive performance, Dollar Tree’s stock experienced a 3.5% drop to $137.11 in premarket trading on Thursday.
One notable factor contributing to the decline in profits is Dollar Tree’s gross margin, which stood at 29.2% for the latest quarter. This marks a decline of 220 basis points compared to the same period last year. The decrease can be attributed to a higher proportion of lower-margin products sold during the quarter, as well as a significant loss of inventory due to employee theft, shoplifting, and other factors.
The issue of inventory loss is not unique to Dollar Tree alone. Dick’s Sporting Goods (DKS) also raised concerns about this problem in its latest earnings report.
In light of these challenges, Dollar Tree has adjusted its outlook for fiscal 2023 profits. The company now expects profits to range from $5.78 to $6.08 per share, revising their previous range of $5.73 to $6.13.
