Dollar Tree same-store sales slow, stock drops with it

Shares of Dollar Tree (DLTR) fell nearly 10% Thursday following the company's fiscal second quarter earnings report. 

The discount chain reported an increase of 1.2% in same-store sales, a key metric in evaluating retailers, which was below the 2.7% increase in the same period last year. The slowing sales caused Dollar Tree to lower its net sales expectations for the year to the range of $20.69 billion to $20.87 billion. It previously was expected to post revenue between $20.79 billion and $21.08 billion. 

Revenue for the quarter reached $5 billion, up from $3.01 billion in the prior same period thanks to the company's acquisition of Family Dollar which it purchased for $9.2 billion last year. Wall Street was hoping for $5.08 billion in revenue according to analysts polled by S&P Global Capital Intelligence. 

In its earnings call Thursday Dollar Tree president and chief operating officer Gary Philbin attributed the slowdown in stores partially to a calendar shift that counts August as a part of the third fiscal quarter this year whereas last year it was included in the second quarter. 

Not everyone agrees with that. "That would only describe part of it," says Efraim Levy, a senior equity analyst at Standard and Poor's. “The Capital IQ consensus was for 2.4% higher same store sales, they came in at 1.2%. I don’t think a couple of days accounts for the whole thing.”  

“There seems like there is a general consumer malaise,” Levy notes, that is affecting the retail industry that even the discount stores are not immune to. 

Net income came in at $170.2 million, or 72 cents per share. Wall Street was eyeing $170.17 million in profit.

Dollar Tree stock ended Thursday down $9.43 to $85.50.

Follow Eli Blumenthal on Twitter @eliblumenthal