4) Dollar Tree, Inc. (NASDAQ:DLTR)
Market cap (As of 25 October): $14.2 billion
Forward P/E (As of 25 October): 10.8x
% Decline on a YTD Basis: ~53%
Number of Hedge Fund Holders: 38
Dollar Tree, Inc. (NASDAQ:DLTR) operates retail discount stores.
Dollar Tree, Inc. (NASDAQ:DLTR)’s multi-price point strategy at Dollar Tree stores reflects a departure from the company’s long-standing $1 price point model. This should help the company achieve topline and earnings growth in the near term. The expanded product assortment should help Dollar Tree, Inc. (NASDAQ:DLTR) expand its customer base. Overall, the company’s strong brand recognition and an extensive store network should be critical tailwinds. Its multi-price expansion and store growth acceleration strategy should help it navigate the challenging environment.
Dollar Tree, Inc. (NASDAQ:DLTR) focuses on slowing down the pace of converting stores to the multi-price format in a bid to ensure readiness. The company highlighted that its customers are responding favorably to initiatives, such as expanding multi-price offerings, and it continues to see a meaningful sales lift at its Dollar Tree stores which were converted to its newest in-line multi-price format.
During Q2 2024, Dollar Tree, Inc. (NASDAQ:DLTR) announced that it initiated a formal review of strategic alternatives for the Family Dollar business segment, including the potential sale, spin-off, or other disposition of the business. However, on 1st August 2024, First Insight, Inc. announced the strategic partnership with Family Dollar. The initiative is focused on refining Family Dollar’s merchandise assortment strategy by leveraging First Insight’s predictive analytics and actionable data.
Analysts at Sanford C. Bernstein began coverage on the shares of Dollar Tree, Inc. (NASDAQ:DLTR) on 22nd October. They gave a “Market perform” rating and a $76.00 target price. Madison Investments, an investment advisor, released its third-quarter 2024 investor letter. Here is what the fund said:
“The bottom five detractors for the quarter were Dollar Tree, Inc. (NASDAQ:DLTR), MKS Instruments, PACCAR, Copart, and Amphenol. Dollar Tree underperformed following disappointing sales at the core Dollar Tree banner and reduced full year earnings guidance. The company, as well as its closest peers, is facing headwinds from a weak low-end consumer, less ‘trade-down’ benefit from middle-income consumers, and a tough competitive environment. Despite these headwinds, we are encouraged by the long-term prospects of the multi-price initiatives at the Dollar Tree banner, with the latest iteration of updated stores showing a strong up-lift in sales. As management more aggressively rolls out these updates, the impact to the company will be more meaningful, and, we believe, result in much higher earnings power.
The headwinds outlined above impacting Dollar Tree’s business has resulted in the stock trading at depressed levels. Given our confidence in the core strength of the Dollar Tree franchise and its potential long-term earnings power, we added to our holding.”
