Alexander MacDonald Dollar Tree DLTR-Q TOP PICK May 08, 2024

If company not performing well - would recommend selling. 

The consumer is realizing that dollar stars no longer offer bargains. These stores were raising prices aggressively during Covid and can't call themselves dollar stores now. Look at places like Walmart instead for deals.

He thinks the problem is that consumers would rather spend at Walmart or Costco.

Retail is tough right now, no matter if you're high end or low. Management missteps reflected in stock price. Falling knife. Might be a bounce for a trade, but not where you want to be for the long run. He's long term, not a trader.

If Trump slaps tariffs on Chinese goods, the dollar stores will suffer badly.

Sold a couple of months ago on poor performance. Questions about health of lower-income consumer have been flagged on conference calls, and this concern is creeping up even to the medium-income consumer. Taking steps to increase price points. An improving consumer would be a tailwind. If he had to choose, this would be his pick.

It reports Wednesday. It no longer sells the value in their products, certainly not since Covid. Even Walmart is struggling, so Dollar Tree?

The merger with Family Dollar never made sense, and he never liked FD. This has led to $8 billion in losses. Shameful. They never had a plan to integrate.

It reports Wednesday. How much longer can they put a lid on prices, driven up by tariffs? That said, he expect a good quarter, because they got a lot of merchandise before tariffs. But he's worried about guidance--they may need to raise prices.

They reported today: sales grew 11.3% and beat and earnings beat. DT reports the highest growth coming from their richest customers, namely over $100,000 annual income. Unlike DG, Dollar Tree could be hurt by Trump's tariffs; TF said that this quarter their earnings could slide 45-50%, then re-accelerate later this year. Also, DT faces pressure from divesting Family Dollar, which didn't work out. Tariffs: DT imports 40% directly from China, so they are heavily exposed.