(Reuters) -Dollar Tree Inc said on Thursday that its full-year profit would be at the lower end of its forecast, with the discount store retailer’s margins under pressure from decades-high inflation.
Shares of the company, which has cut prices at its Family Dollar stores to sustain demand, fell about 3% to $159.78 in premarket trading.
Dollar Tree has been hit by slowing demand for everything from toys and party supplies to homeware, which are typically more profitable than food and other perishables.
Industry bellwethers Walmart Inc and Target Corp issued gloomy holiday sales forecasts last week, with Target pointing to a sharp fall in demand for discretionary goods.
Dollar Tree is also grappling with higher freight costs and price cuts at its Family Dollar banner that were rolled out in the second quarter.
The price cuts, however, helped Family Dollar post its strongest quarterly same-store sales jump since 2020.
Dollar Tree now expects annual profit at the lower half of its previously estimated range of $7.10 per share to $7.40 per share.
The company raised its forecast for fiscal 2022 net sales to between $28.14 billion and $28.28 billion, compared with its previous outlook of $27.85 billion to $28.10 billion.
Dollar Tree’s total same-store sales rose 6.5% in the third quarter, beating estimates of a 4.7% jump, according to Refinitiv IBES data.
The company reported a quarterly profit of $1.20 per share, beating estimates of $1.18.
(Reporting by Deborah Sophia in Bengaluru; Editing by Devika Syamnath and Shounak Dasgupta)
