Greenback Tree’s Q3 outcomes beat on bettering demand, CFO to step down

By Anuja Bharat Mistry

(Reuters) -Greenback Tree’s third-quarter revenue and gross sales beat market expectations on Wednesday as extra clients shopped at its low cost shops for merchandise together with attire and electronics.

Shares of the corporate, which have misplaced practically half of their worth this 12 months, rose about 4% because the greenback retailer raised the decrease finish of its annual forecasts, whose midpoint exceeded analysts’ estimates.

Greenback Tree (NASDAQ:DLTR) additionally mentioned CFO Jeff Davis will step down after roughly two years on the job, however will stay with the corporate till the top of fiscal 2024. His exit comes simply weeks after CEO Rick Dreiling resigned.

“Given the string of latest disappointments, the quarterly outcomes and information are a relative win,” mentioned Scot Ciccarelli, analyst with Truist Securities.

He mentioned the corporate faces challenges, together with a brand new administration and the necessity to acquire market share from rival Walmart (NYSE:WMT).

Low cost retailers have been dropping market share in a race with massive gamers together with Walmart, Goal (NYSE:TGT) and PDD Holding’s e-commerce platform Temu as they preserve costs low to draw cost-conscious customers.

Greenback Tree is in the course of an overhaul, particularly of its Household Greenback banner. It determined to shutter 970 of its Household Greenback shops and evaluation choices, together with the potential sale or spin off of the struggling banner.

“The fourth quarter bought off to a softer begin given the election and later-than-usual Thanksgiving timing,” interim CEO Mike Creedon mentioned.

Within the third quarter, it benefited from larger retailer site visitors in addition to customers shopping for extra per journey on common. Retailer site visitors rose 1.6%, with progress in Greenback Tree and Household Greenback banners.

Its quarterly gross margin expanded 120 foundation factors to 30.9%, partly attributable to decrease freight prices.

Web gross sales of $7.56 billion beat expectations of $7.44 billion, whereas the corporate’s adjusted earnings per share of $1.12 exceeded estimates by 5 cents, based on information compiled by LSEG.