4 Things to Watch in Dollar Tree’s Q3 Earnings Report

Heading into its third-quarter earnings, the stock is up 35% year over year.

On Tuesday, Dollar Tree is scheduled to release its third-quarter earnings report. The company has performed well this year, and at the time of this writing, the stock is up 24% year to date. Overall, the company is considered a moderate buy on Wall Street.  

The company’s made several positive changes over the past year, including closing underperforming stores and renovating over 500 others. These efforts seem to have paid off since the company has seen its comps increase in its renovated stores.

4 Things to Watch on Tuesday

Here are four things to watch for from Dollar Tree’s third-quarter earnings report.

1. Will the company’s comparable sales continue rising?

Last quarter, Dollar Tree’s comparable sales rose by 2.4%. This was a modest improvement, but it was the highest level of growth the discount retailer had seen in years. Investors will be looking to see if this growth can continue and if Dollar Tree can deliver higher same-store sales numbers this time.  

2. How will rising tariffs affect Dollar Tree?

Rising tariffs are a concern for most retailers, and Dollar Tree doesn’t have the luxury of negotiating with its vendors. The retailer expects to get hit with more than $25 million in tariffs by the end of December. Investors will be looking to see how rising tariffs weigh on the company’s margins. 

3. What will the company do about its FDA warning?

Earlier this month, Dollar Tree received a warning letter from the FDA. The letter stated that the company is selling potentially unsafe over-the-counter medication. 

The medication is sold under the Assured Brand line. The manufacturers violated a number of federal laws when it came to testing the finished product. 

The FDA had previously warned Dollar Tree about this, but the company continued importing medication from this manufacturer anyway. The company has two weeks to explain how it will correct the violation. 

4. What is the company’s full-year outlook? 

And finally, investors want to see that the company’s momentum is continuing to increase. If the company can pull off a strong third quarter, it should be on track to finish 2019 on a high note.