Here’s Why Dollar Tree Is Worried About Rising Costs and Dollar General Isn’t
It’s curious: Management at discount retailer Dollar Tree (NASDAQ:DLTR), also parent to the Family Dollar chain, made a point of cautioning shareholders during the company’s most recent quarterly earnings call that rising freight costs would be biting pretty deeply into profits, at least through the current quarter. Rivals Dollar General (NYSE:DG) and the much smaller Big Lots (NYSE:BIG) didn’t express similar concerns during their latest earnings releases.
There’s a good reason one of these organizations is issuing a warning in the form of lowered guidance, while the other two aren’t. And it’s not a conscious decision to ignore potential problems and hope for the best. Whereas Big Lots and Dollar General are mostly buffered from rising freight costs, Dollar Tree has considerably less wiggle room in terms of profit margin.