Discount retailer Dollar Tree (NASDAQ: DLTR) reported an earnings miss early Thursday. While it is common for strong companies to miss analysts expectations here and there, this one was not even close. Shares plummeted almost 10%, and rightfully so, as investors chose to move their money elsewhere. Today we breakdown the, across the board earnings miss by the dollar store chain.
First, the company reported earnings of $0.72 per share, but analysts had expected to see $0.73. Normally this would not cause any panic or heavy selling pressure, but wait, it gets worse.
Inside the earnings report, the company posted revenue of $5 billion, which also fell short of analysts' expectations of $5.09 billion. They tried to draw attention away from this miss by saying that it expects revenue of $5.02 to $5.20 billion next quarter. Unfortunately analysts are expecting at least $5.13 billion.
On a positive note the company posted same store sales growth of 1.2%. This sounds good but Wall Street was looking for growth of 2.4% or better. Ouch.
Now, as for earnings for the whole year, the company raised its earnings guidance to $3.67 per share to $3.82 per share, up from its prior view of $3.58 to $3.80 per share. Analysts aren't letting up though. They had already factored in an expectation of earnings of $3.79 per share for the year.
Even more bad news was that Dollar Tree lowered their full year revenue to a range of $20.69-$20.87 billion. Previously the company was projecting $20.79 -$21.08 billion. Wall Street just wouldn't let up though. The street is looking for $20.97 billion at least for 2016.
The CEO, Bob Sasser said in a statement that the company faces a "challenging" retail sales environment, but continues to deliver gross margin improvement and manage expenses "effectively."
This didn't help the share performance today. The stock was absolutely clobbered as investors headed for the exit. Share volume was way above average and just this one day erased almost 3 months worth of gains for Dollar Tree. Hope they get it together soon.