US Dollar Stores Offer Poor Forecast As Shipping Costs Rise
Major U.S. dollar stores on Thursday gave lukewarm profit forecasts, weighed down by higher transportation costs, even as increased spending on stimulus checks helped them record better-than-expected quarterly sales.
Shares of Dollar Tree Inc (DLTR.O) fell 6% ahead of the bell as it forecast freight costs to be up to 80 cents per share higher for the remainder of the year, compared to 2020 Dollar General Corp’s (DG.N) were down 1%.
Growing freight cost pressures across industries have dented profit prospects, including those of retailers Abercrombie & Fitch Co (ANF.N) and Kohl’s Corp (KSS.N) as well as many packaged food companies. , at a time when sales after a crisis due to a pandemic.
Retailers also face higher labor costs as the job market tightens, putting increased pressure on the bottom line.
Dollar Tree, which also operates Family Dollar stores, predicts its earnings per share on Thursday to be between $ 5.80 and $ 6.05 for fiscal 2021. Analysts on average expect earnings of 6.24 $ per share, according to IBES data from Refinitiv.
The Chesapeake, Va.-Based company said its projection for an increase in freight costs for the remaining quarters of the year was significantly higher than a quarter ago, but the increase due to interruptions navigation would not be permanent.
Dollar General, who also called for higher costs, raised its 2021 forecast profit to between $ 9.50 and $ 10.20 per share, with an average market estimate of 9.58 $ near the bottom of the range.
Still, both chains topped first-quarter net sales estimates as more people used their stimulus checks to splurge on clothing, seasonal and household items.
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