Dollar Tree is seeing a surge in demand during the coronavirus crisis — but the discount chain isn’t sure the trend will hold.
The Chesapeake, Va.-based company, which operates stores under the Dollar Tree, Family Dollar and Dollar Tree Canada signs, is hiring 25,000 workers as it seeks to fulfill an “unprecedented spike” in demand for certain products. But the retailer announced today that it was withdrawing its outlook for the first quarter ending May 2 and full-year guidance for fiscal 2020 amidst ” the current state of uncertainty.”
Through March 29, Dollar Tree has seen quarter-to-date same-store sales spike by 14.4% for Family Dollar and rise 7.1% for Dollar Tree. Although sales of household products and food are “strong” across both banners, the company predicts it could face coronavirus-related declines in certain discretionary categories during the peak Easter selling season.
“Customers rely on Dollar Tree and Family Dollar as an essential retailer for their daily shopping needs. Understandably, they are very concerned about the recent global spread of the coronavirus. Our stores experienced an unprecedented spike in demand for certain products,” stated CEO Gary Philbin.
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Sales for the remainder of the first quarter, Dollar Tree says, may be impacted by consumer shopping patterns in areas with stay-in-place orders, decreases in demand and related markdowns for certain discretionary products, as well as by the company’s ability to quickly secure and restock high-in-demand products.
As the coronavirus crisis continues, Dollar Tree believes it has the ability to “perform well” due to a “strong balance sheet and financial flexibility.” As of March 30, it has about $1.9 billion in cash and investments, including $750 million drawn from a $1.25 billion revolving line of credit. The discount chain “does not expect” to repurchase shares in the near future under its share repurchase authorization program.
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