DLTR: Margin Pressure


Dollar Tree (DLTR) – owner of almost 16,500 Dollar Tree and Family Dollar stores – just reported 2Q23 earnings. While the top line was strong with enterprise comps of +6.9%, DLTR’s margins are being pressured by shrink (i.e. theft) and sales mix. Operating margin of 3.9% was down from 7.5% a year ago resulting in a 43% decline in EPS to 91 cents. DLTR is guiding current year EPS is to $5.93 at the midpoint of its range – down from $7.21 last year. I like DLTR as a play on growing inequality and with shares down 5% in the premarket this might be a good spot to pick some up.

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