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Home 2. Industries 3. Retail/Wholesale 4. Earnings Results Earnings Results Dollar Tree is the latest retailer to say shoplifting is squeezing margins Last Updated: Aug. 24, 2023 at 12:18 p.m. ET First Published: Aug. 24, 2023 at 6:47 a.m. ET By Ciara Linnane comments 'Shrink,' or theft, is hurting Dollar Tree's margins [im-841159] Dollar Tree joins the many retailers complaining that shoplifting is squeezing margins. Scott Olson/Getty Images * Email icon * Facebook icon * Twitter icon * Linkedin icon * Flipboard icon * Print icon * Resize icon Referenced Symbols Advertisement [ ] TGT +0.72% WMT -0.77% LOW -1.86% DKS +2.16% FL +4.93% DLTR -12.90% SPX -1.35% Dollar Tree Inc.'s stock fell 10% Thursday, after second-quarter earnings fell sharply from a year ago, although they still beat consensus. "While factors like sales mix and elevated shrink continue to pressure margins, we generated a year-over-year increase in gross profit dollars," CEO Rick Dreiling said in a statement. Many retailers have complained this earnings season about "shrink", which can mean damaged items but more often means shoplifting, which companies claim is being conducted by organized gangs. Target Corp. TGT, +0.72%, Walmart Inc. WMT, -0.77%, and this week Lowe's Cos. LOW, -1.86%, Dick's Sporting Goods Inc. DKS, +2.16% and Foot Locker Inc. FL, +4.93% have all highlighted the impact on their business and staff, and claim they are losing billions of dollars a year. See: Walmart's 'shrink' challenges differ from those of other retail giants, CEO says Related: Target facing 'unacceptable amount' of retail theft and organized retail crime, CEO says For more, read: As concerns mount about organized retail crime, these are the products being targeted Chesapeake, Va.-based Dollar Tree DLTR, -12.90% had net income of $200.4 million, or 91 cents a share, for the quarter, down from $359.9 million, or $1.61 a share, in the year-earlier period. Adjusted per-share earnings also came to 91 cents, ahead of the 87 cent FactSet consensus. Revenue rose to $7.325 billion from $6.769 billion, also ahead of the $7.182 billion FactSet consensus. Dollar Tree's same-store sales rose 7.8% while FactSet expected a 4.8% rise. Dollar Tree said its quarterly gross margins declined 220 basis points to 29.2%, driven by lower initial mark-on, unfavorable sales mix, elevated shrink, and wage investments at its distribution centers, which were partially offset by lower freight costs. Dollar Tree said it is tightening its guidance ranges for 2023. "We are bringing in the high and low end of our outlook range for diluted EPS to better reflect the balance of opportunities and risks we see in the current operating environment," Chief Financial Officer Jeff Davis said in a statement. " Our outlook takes into consideration several factors including shifting sales mix, unfavorable shrink trends, higher diesel fuel prices, incremental savings on ocean freight, and our improved sales performance,.' The company now expects sales to range from $30.6 billion to $30.9 billion, which compares with a FactSet consensus of $30.4 billion. It expects EPS of $5.78 to $6.08, compared with a FactSet consensus of $6.03. For the third quarter, the dollar store is expecting EPS of 94 cents to $1.04 and sales of $7.3 billion to $7.5 billion. The FactSet consensus is for EPS of $1.27 and sales of $7.3 billion. Jefferies analysts, who have a hold rating on Dollar Tree stock, said the revenue number was strong, but overall performance is being hurt by margin pressures. "We believe Dollar Tree is well-positioned, but we remain sidelined as (the company) is still in the early innings of its new strategy." wrote analysts led by Corey Tarlowe. The stock has fallen 9% in the year to date, while the S&P 500 SPX, -1.35% has gained 15.5%. Advertisement Advertisement Partner Center Advertisement Advertisement Advertisement Advertisement Most Popular Advertisement Read full story Disney's stock closes at a 9-year low, and it still may not be cheap Read full story Our older son, 37, is an artist and puts $1,000 a month on our credit card. Our other son, 35, is self-sufficient. Is that unfair? Read full story This EV company has a bigger market cap than Ford or GM. But you may not have heard of it. Read full story How biometrics could change the way consumers pay online and in stores Read full story Why AMD, Marvell, Intel and other chip stocks sank after Nvidia earnings Advertisement Advertisement Read Next Read full story Read Next Here's the technology Lowe's plans to deploy to combat power-tool theft Lowe's is developing RFID technology embedded to combat theft of power tools from its stores More On MarketWatch * Nvidia's stock soars after AI boom pushes chip giant to record earnings and blowout forecast * Barron's: These Stocks Are Moving the Most Today: Nvidia, AMC, Petco, Splunk, Boeing, Spirit AeroSystems, Dollar Tree, and More * Disney's stock closes at a 9-year low, and it still may not be cheap * Barron's: What Embraer Stock Says About the Plane Crash Involving Wagner Chief About the Author [mw-bio] Ciara Linnane Ciara Linnane is MarketWatch's investing- and corporate-news editor. She is based in New York. 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