Why Dollar Tree Stock Is Down Nearly 20% Today

The pressure on discount retail stocks continues. 

Shares of Dollar Tree (DLTR), which runs both the chain of the same name and the Family Dollar line, were recently down nearly 20%—to levels not seen since 2015—after the company pulled back its financial outlook and reported disappointing quarterly results. Dollar General (DG), meanwhile, was off about 2%, near the levels to which it dropped after its own downbeat report last week. 

Both companies say their shoppers are facing a tough economic environment; Dollar Tree Chief Operating Officer (COO) Mike Creedon on a conference call with analysts Wednesday called it "one of the most challenging macro environments we've ever seen."

"As we have seen for several quarters now, demand from Family Dollar's core lower-income customer remains weak," Creedon said on the call, a transcript of which was made available by AlphaSense. "Dollar Tree has a broader customer base that includes more middle- and upper-income households and beginning this quarter, we started to see inflation, interest rates and other macro pressures have a more pronounced impact on the buying behavior of these customers."

Dollar Tree Executives Use Term 'Belt-Tightening' on Call

Dollar Tree, which earlier this year said it was considering strategic alternatives for its business—it didn't report any substantial updates to that effort today—leaned heavily into economic stress in its discussion of its latest earnings and outlook, specifically using the term "belt-tightening."

It also says it's holding up competitively, though some analysts have wondered whether Walmart (WMT) has been eating into other retailers' share of the consumer dollar. 

"We're not seeing, necessarily, a loss from a competitive standpoint," Chief Financial Officer (CFO) Jeff Davis said on the call. "We continue to add new customers, maintain market share, continue to resonate with the customer."