DLTR - Embedded Expectations Analysis - 2020 06 23
Dollar Tree, Inc. (DLTR:USA) currently trades near historical averages relative to UAFRS-based (Uniform) earnings, with a 18.9x Uniform P/E. At these levels, the market has expectations for profitability to remain stable, but management may be concerned about their gross profit margin, supply chain cost initiatives, and Family Dollar renovationsSpecifically, management may lack confidence in their ability to improve their gross profit margin, control SG&A expenses, and sustain enterprise same-store sales growth. Furthermore, they may be exaggerating their ability to meet their EPS growth guidance, and they may have concerns about the progress of their renovation and discretionary business refinement at Family Dollar. Moreover, management may lack confidence in their ability to execute their customer-facing initiatives in merchandising, drive supply chain efficiencies in both freight and distribution costs, and maintain proper promotional activity levels. Finally, they may have concerns about their new distribution center in Texas and their shift from consumable items to a discretionary margin-enhancing product mix
Dollar Tree is an operator of discount variety stores. The company's stores operate under the names of Dollar Tree, Family Dollar and Dollar Tree Canada. The company's segments are: Dollar Tree, which is the operator of discount variety stores providing merchandise at the fixed price point of $1.00; and Family Dollar, which operates general merchandise discount retail stores. The merchandise mix in the company's Dollar Tree stores consists of consumable merchandise, variety merchandise, and seasonal goods. The merchandise mix in the company's Family Dollar stores consists of consumable merchandise, home products, apparel and accessories merchandise, and seasonal and electronics merchandise.
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