Even dollar chains are seeing spending fall as higher prices put pressure on more consumers

Dollar Tree lowers its full-year profit and sales forecasts as customers continue to grapple with higher prices and lower spending.

The stock fell more than 10% before the open on Wednesday after hitting a 52-week low the previous day. Less than a week ago, shares of rival grocery chain Dollar General suffered their biggest one-day decline in history after a dismal quarter.

Dollar Tree said it now expects full-year adjusted earnings of $5.20 to $5.60 per share, down from its previous forecast of $6.50 to $7 per share.

The Chesapeake, Virginia-based company also forecast full-year sales of $30.6 billion to $30.9 billion, down from $31 billion to $32 billion.

Analysts surveyed by FactSet expect full-year earnings of $6.56 per share on revenue of $31.17 billion.

Dollar Tree is trying to attract customers from other retailers by offering ultra-low prices, but giants like Walmart and Target also admit their customers are under pressure and they are lowering their prices, too.

Dollar Tree had second-quarter revenue of $7.38 billion. Adjusted revenue was $7.37 billion, below the $7.5 billion expected by analysts surveyed by Zacks Investment Research.

Dollar Tree earned $132.4 million, or 62 cents per share, in the period ended Aug. 3. Excluding certain items, profit was 67 cents per share, well below Wall Street expectations of $1.03 per share.

Chief Financial Officer Jeff Davis said in a prepared statement that the company’s earnings per share were down, in part because of economic pressure on its middle- and upper-income customers. Dollar General said last week that lower-income customers were feeling the most pressure.

Dollar Tree Chief Operating Officer Mike Creden said during a conference call Wednesday morning that financial pressures are shifting to higher-income customers.

“Dollar Tree has a broader customer base that includes more middle- and upper-income households, and starting this quarter, we began to see inflation, interest rates and other macroeconomic pressures having a more pronounced impact on the purchasing behavior of these customers,” Creden said.

Even as inflation slows, many Americans remain dissatisfied with today’s dramatically higher prices for necessities like gas, food and housing compared to pre-pandemic levels. Many have cut back on non-essential spending to save money for things like groceries.

For the third quarter, Dollar Tree forecast adjusted earnings of $1.05 to $1.15 a share on revenue of $7.4 billion to $7.6 billion. Analysts surveyed by FactSet expected earnings of $1.31 a share on revenue of $7.58 billion.