Why Dollar Tree Stock Is Plummeting Today

Dollar Tree (DLTR 1.20%) stock is getting crushed in Wednesday's trading. The discount retailer's share price was down 24% as of 2:02 p.m. ET, according to data from S&P Global Market Intelligence.

Before the market opened Wednesday morning, Dollar Tree published results for its fiscal second quarter, which ended Aug. 3. Sales and earnings fell short of analysts' consensus expectations, and management cut its full-year guidance targets.

Dollar Tree serves up a big earnings miss

Dollar Tree posted non-GAAP (adjusted) earnings per share of $0.67 on sales of $7.38 billion. Wall Street's expectations had called for adjusted earnings per share of $1.04 on revenue of $7.48 billion.

Same-store sales for its enterprise segment increased 0.7% year over year, the Dollar Tree segment's same-store sales rose by 1.3%, and same-store sales for the Family Dollar segment dipped by 0.1%. Overall revenue was up roughly 0.7%, but adjusted earnings per share were down 26.4%. The company continued to face some macroeconomic headwinds, and expenses from store openings and legal liability costs also weighed on the bottom line. Dollar Tree Non-GAAP EPS of $0.67 misses by $0.37, revenue of $7.38B misses by $100M | Seeking Alpha

Big guidance cuts

For its fiscal third quarter, Dollar Tree is guiding for sales of $7.4 billion to $7.6 billion. Adjusted earnings per share for the quarter are projected to come in between $1.05 and $1.15.

For the full fiscal year, Dollar Tree now expects revenue of between $30.6 billion and $30.9 billion. Previously, management had forecast that annual sales would be between $31 billion and $32 billion. Adjusted earnings per share are projected to be between $5.20 and $5.60, a big step down from management's previous guidance range of $6.50 to $7.

In addition to the weaker-than-anticipated Q2 performance and the lower sales outlook for the year, the company cited costs working out to roughly $0.12 per share stemming from its acquisition and reopening of 99 Cents Only Stores as reasons for the downward revision to the earnings guidance.