Tariffs, Faulty Acquisitions Hit Dollar Tree in Q3

Dollar Tree’s stock plunged as much as 17% Tuesday following its Q3 earnings miss. During the quarter, Dollar Tree revenue increased 3.7% to $5.8 billion, but profit declined 9.2% to $255.8 million. Dollar Tree also lowered its forecast for Q4.

Dollar Tree had a few battles to wage last quarter...

• The Family Dollar problem: Four years after Dollar Tree’s nearly $9 billion acquisition of Family Dollar, it still hasn’t convinced it to call it “dad.” Costly efforts to clean up Family Dollar’s act with store renovations and rebrands haven’t worked out.
• The party people problem: An ongoing helium shortage deflated balloon sales at some locations.
• The trade war problem: Dollar Tree sources most of its goods from China. It hasn’t yet rerouted its supply chain or found a way to offset tariff costs without passing higher prices to its mostly low-income customer base.

Looking ahead…Dollar Tree said additional tariffs on Chinese imports slated for Dec. 15 would add $19 million to the costs of goods in Q4.