DLTR Stock Declines 50% From 52-Week High: How Should You Play It?

Core Viewpoint - Dollar Tree, Inc. has seen a significant decline in its stock performance, losing nearly half of its value and facing challenges from product cost inflation, unfavorable sales mix, and elevated shrink [1][2][10] Financial Performance - The company's stock price has dropped to $75.67, reflecting a 49.9$151.22 [1] - Over the past three months, Dollar Tree shares have decreased by 29.7%, while the broader industry and S&P 500 have seen growth of 2.4% and 2.7%, respectively [1] - Analysts have revised the Zacks Consensus Estimate for fiscal 2024 down by 17.8% to $5.45 per share and for fiscal 2025 down by 20.3$6.21 per share, indicating a year-over-year earnings decline of 7.47% for fiscal 2024 [4] Segment Performance - The Family Dollar segment has been experiencing soft spending trends among low-income consumers, leading to a 0.1% dip in comparable store sales in the second quarter of fiscal 2024 [5][6] - The average ticket size decreased by 0.8%, and discretionary comps dropped by 1.7%, with lower SNAP benefits contributing a 60-basis point headwind [6] Macroeconomic Factors - Macroeconomic pressures, including inflation and high interest rates, have negatively impacted customer sentiment and discretionary demand [8] - Management has adopted a cautious approach, estimating low-single-digit comps growth for the remainder of fiscal 2024 [8] Cost Structure - Dollar Tree has faced rising selling, general and administrative (SG&A) expenses due to increased operating costs, including general liability claims and elevated utility costs [9] - The company has revised its fiscal 2024 outlook to reflect these challenges, including a general liability charge and a conservative sales forecast [7][10]