Dollar Tree, Inc.NASDAQ
Go Long Dollar Tree - A Stable Retailer Potentially Undervalued By 70%
Luis V. Sanchez • 18 Comments
Luis V. Sanchez • 18 Comments
Tue, Dec. 6, 11:10 AM
- The grocery store sector has 2K reasons to worry after the WSJ reported yesterday that number of brick-and-mortar locations are being planned by the Seattle e-commerce giant.
- Though Amazon's Project Como has been an overhang for the sector for a while, the volume of stores being considered and the differing formats (drive-through, premium) is an eye opener.
- Whole Foods Market (WFM -1.4%), Sprouts Farmers (SFM -1.1%), Kroger (KR -0.7%), Village Super Markets (VLGEA -1.3%) and Weis Markets (WMK -0.9%) are all lower on the day.
- Dollar General (DG -0.7%) and Dollar Tree (DLTR -0.3%) are also down slightly.
- Previously: Retail heavyweights to keep a watch on Amazon Go (Dec. 5)
- Previously: Amazon reportedly developing multiple grocery store formats, prospect for over 2,000 locations cited (Dec. 5)
Tue, Nov. 29, 10:06 AM
- Cyber Monday online sales increased 12.1% to $3.45B, according to an updated tally from Adobe.
- Mobile spending was up 34% Y/Y to $1.07B to account for 31% of sales.
- Conversion rates were highest for desktops at 6.3%, while smartphones (2.8%) and tablets (5.1%) were still above holiday averages.
- Holiday shopping season sales through November 28 are up 7.6% to $39.97B.
- The S&P Retail ETF (NYSEARCA:XRT) is up 1.81% over the last week to outpace broad market averages. The list of outperformers over the last week -- which factors in the pre-Thanksgiving buzz, Black Friday reports, and Cyber Monday numbers -- includes Target (NYSE:TGT), Wal-Mart (NYSE:WMT), Hasbro (NASDAQ:HAS), Mattel (NASDAQ:MAT), Staples (NASDAQ:SPLS), DSW (NYSE:DSW), Barnes & Noble (NYSE:BKS), Dollar Tree (NASDAQ:DLTR), Dollar General (NYSE:DG), Burlington Stores (NYSE:BURL), The Children's Place (NASDAQ:PLCE) and Best Buy (NYSE:BBY). An interesting sidenote is that all the retail names listed above topped the return of Amazon for the 5-session period.
Fri, Nov. 25, 12:34 PM
- Credit Suisse thinks the dollar store sector could benefit if the legal challenge to extending overtime pay benefits to workers making up to $47K holds up.
- “Dollar stores would have been most heavily impacted by the new overtime rule given the sheer number of stores they operate and their unique low-cost labor model,” reads the CS note.
- “With only two to three employees per store typically working at any given time, store managers comprise a significant percentage of store labor and generally work heavy overtime.”
- Beyond Dollar General (DG +0.6%) and Dollar Tree (DLTR +0.1%) -- a list of companies that could benefit from the OT rules staying the same includes Five Below (FIVE -1.6%), Big Lots (BIG -0.5%) Fred's (FRED -1.2%) and Ollie's Bargain Outlet Holdings (OLLI -0.2%).
- Previously: New DOL overtime rule in state of flux (Nov. 25)
Fri, Nov. 25, 7:54 AM
- Millions of workers poised to start earning overtime pay next week are now in limbo after a federal judge in Texas blocked new wage rules set by the Department of Labor with a temporary injunction.
- The new DOL rule raised the exemption for OT pay to $47,476 in annual pay, from the current level of $23,360, impacting a huge number of workers in the retail industry.
- Piper Jaffray says it's uncertain how the Obama administration will react. It's also unclear if major companies have the ability to quickly pull back on the new OT rules set to go into effect on December 1 due to the programmed changes in their payroll and IT systems.
- The investment firm says the retailers most affected by overtime changes include Dollar General (NYSE:DG), Dollar Tree (NASDAQ:DLTR), Sally Beauty Holdings (NYSE:SBH), Regis Corporation (NYSE:RGS), Bojangles (NASDAQ:BOJA), Starbucks (NASDAQ:SBUX), Sonic (NASDAQ:SONC), Noodles (NASDAQ:NDLS), Potbelly (NASDAQ:PBPB), Del Taco (NASDAQ:TACO) and Zoe's Kitchen (NYSE:ZOES).
- Source: Bloomberg
Tue, Nov. 22, 10:01 AM
- Dollar Tree (NASDAQ:DLTR) is up 11% after delivering a solid quarter that included an increase in Family Dollar acquisition benefits.
- Burlingon Stores (NYSE:BURL) races 15% higher after its Q3 results topped expectations.
- DSW (DSW +7.5%) and Chico's (CHS +7.3%) also turned in solid reports to round out the good cheer in the sector.
- Other retailers on the move include Dollar General (DG +3.1%), Big Lots (BIG +3.8%), Ollie's Bargain Outlet Holdings (OLLI +1.9%), American Eagle Outfitters (AEO +3.5%), Five Below (FIVE +2.8%), and Fred's (FRED +1.8%).
- Even the bigger chains are bringing in buyers, with Target (TGT +1.3%), Wal-Mart (WMT +1.5%), Staples (SPLS +1.8%) and Office Depot (ODP +3.2%) all ahead of broad market averages.
- The general theme in the retail sector today is margin improvement as some merchandise and operational costs were shown to have been reeled in to improve profitability.
Tue, Nov. 22, 9:17 AM
Tue, Nov. 22, 7:44 AM
- Dollar Tree (NASDAQ:DLTR) reports same-store sales were up 1.7% in Q3. Total sales of $5.0B were a touch short of expectations.
- The retailer says average ticket and customer traffic were both positive during the quarter.
- Gross margin as a percentage of sales increased 210 bps to 30.4%. SG&A expenses fell 20 bps to 23.6% of sales.
- A one-time tax benefit realized in Q3 helped Dollar General to a 25.5% effective tax rate vs. 34.3% a year ago.
- The company sees full-year sales of $20.67B to $20.77B vs. $20.86 consensus and full-year EPS of $3.67 to $3.76 vs. $3.69 consensus.
- A conference call with execs is scheduled for 9:00 AM ET. Commentary on Q4 traffic trends will be key.
- Previously: Dollar Tree beats by $0.03, misses on revenue (Nov. 22)
- DLTR +6.11% to $87.00.
Tue, Nov. 22, 7:32 AM
Mon, Nov. 21, 5:30 PM
Wed, Nov. 9, 6:47 AM
- Voters in Arizona, Colorado and Maine voters approved boosting the minimum wage in their states to $12 per hour. Each state will see the hikes make their way to the $12 level after a series of graduated increases.
- The state of Washington approved increasing the minimum wage to $13.50 by 2020.
- The restaurant industry has already been under pressure, with labor costs as a percentage of sales on the rise. Other pockets of retail will also feel a sting from the higher minimum wage boost.
- Restaurant stocks: CAKE, CBRL, DNKN, DPZ, DRI, EAT, JACK, MCD, RRGB, RT, SONC, WEN, BWLD, BDL, QSR, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN, HABT, NDLS, BOJA, PBPB, PLKI, FRSH, RAVE, LOCO, TACO, PZZA, KONA, BGR, BJRI, CHUY, FRS, CBRL, GTIM, TAST, WING, BOJA, ZOES, FOGO, ARCO, SHAK, YUM.
- Retail stocks: TGT, WMT, BIG, FIVE, DG, DLTR.
- Related ETF: BITE.
Thu, Oct. 13, 10:31 AM
- KeyBanc has discounters on its mind.
- Five Below (FIVE -0.9%) earns an Overweight rating and price target of $47 from the investment firm.
- Dollar Tree (DLTR) also catches an Overweight initiation. "DLTR is a compelling multi-faceted story, supported by a strong execution at legacy DLTR, as well as a synergy and turnaround story at legacy FDO, acquired in 2015," writes analyst Bradley Thomas.
- Dollar General (DG -0.6%) is started at Sector Weight.
- YTD comparison: FIVE +19.9%, DG -4.4%, DLTR +0.3% vs. S&P Retail ETF -0.5%.
Sat, Oct. 8, 9:09 AM
- Retailers want the U.S. election over and quick. The negative tone has created a degree of uncertainty with consumers that has impacted spending and traffic patterns, according to a host of top execs.
- "There is just great uncertainty as to what is going to happen in the U.S. in particular as a result of the outcome of the election," noted Yum Brands (NYSE:YUM) CEO Greg Creed recently. "People may be hunkering down a little bit," he added.
- Expect the topic to be raised on a large number of Q3 earnings calls over the next month to explain away revenue misses.
- It's not an excuse that everyone is buying into. Retail Metrics president Ken Perkins doubts that daily shopping needs are cut short by election fascination and notes consumer confidence is measuring high. Then there's Amazon (NASDAQ:AMZN) which seems to be rolling right along without any Clinton-Trump fatigue.
- Beyond the election wildcard, two underestimated factors impacting some retailers in a more concrete way are the lower level of SNAP (food stamps) benefits being paid out by the government and the elevated cost of health care. There is also the massive challenge with a millennial generation that shuns chains. Just ask anyone in the restaurant sector (NASDAQ:BITE).
- Add it all up and it makes for a challenging period for a mix of retailers that includes Dollar General (NYSE:DG), Dollar Tree (NASDAQ:DLTR), Fred's (NASDAQ:FRED), Ross Stores (NASDAQ:ROST), Wal-Mart (NYSE:WMT), Target (NYSE:TGT), Staples (NASDAQ:SPLS), McDonald's (NYSE:MCD), Popeyes Louisiana Kitchen (NASDAQ:PLKI), Wendy's (NYSE:WEN), Supervalu (NYSE:SVU), Kroger (NYSE:KR), SIgnet (NYSE:SIG), TJX Companies (NYSE:TJX), and Casey's General Stores (NASDAQ:CASY).
- Retail ETFs: XLY, XRT, VCR, RTH, RETL, IYK, FXD, IYC, FDIS, SCC, RCD, UCC, PMR, UGE, SZK, CNDF, FTXD, JHMC.
Thu, Oct. 6, 3:08 PM
- There's an interesting move higher in Dollar General (DG +2.8%) and Dollar Tree (DLTR +4%) today that could have its roots in the Wal-Mart investor meeting going on in Arkansas.
- The retail giant disclosed a subdued plan to add stores in the U.S. as part of its major commitment to growing out its e-commerce business.
- Investors could be taking that as a sign that Wal-Mart is ceding some ground to the discounters.
- Previously: Wal-Mart execs in the spotlight at investment meeting (Oct. 6)
- Previously: E-commerce the star at Wal-Mart investor meeting (Oct. 6)
Tue, Oct. 4, 10:11 AM
- Cleveland Research downgrades Dollar Tree (DLTR -3.2%) to a Neutral rating from Buy after channel checks indicate a slowdown in sales trends.
- Headwinds in the discounter space include increased competition, price deflation in key categories, and a reduction in SNAP benefits.
- The investment firm's dour outlook on the sector is hitting Dollar General (DG -1.5%) and Fred's (FRED -2.2%) as well.
Fri, Aug. 26, 8:18 AM
- Disappointing earnings reports from Dollar Tree (NASDAQ:DLTR) and Dollar General (NYSE:DG) have thrown a spotlight back on the reduced amount of benefits being paid out from the Supplemental Nutrition Assistance Program. While health care cost inflation is a major consideration for retailers with a high mix of low-income customers, the SNAP program factors in as well.
- The issue has been used by executives in the retail sector sporadically in the past as an excuse/explanation for soft sales, but it has added significance in an election year. Both Donald Trump and Hillary Clinton have promised to improve the food stamp program, although in different manners.
- The companies listed below talked about the impact of food stamps on their recent earnings conference calls.
- SpartanNash Company Earnings Call Transcript
- Alimentation Couche-Tard Earnings Call Transcript
- Papa Murphy's Earnings Call Transcript
- Dollar Tree Earnings Call Transcript
- Dollar General Earnings Call Transcript
- Related stocks: BIG, FIVE, WMT.
Thu, Aug. 25, 12:45 PM