Dollar General, Dollar Tree, Five Below Q3 Earnings Preview: Can Discount Retailers Rebound Ahead Of Holidays?

Discount retailers Dollar General (DG), Dollar Tree Inc (DLTR), and Five Below Inc (FIVE) are preparing to captivate investors when they announce their third-quarter earnings this week.

Here’s a glimpse at their earnings forecasts and what analysts are predicting.

Dollar General

The company, based in Goodlettsville, Tennessee, will deliver its third-quarter financial results before the market opens on Thursday, December 5.

As per data from Benzinga Pro, analysts are projecting:

• Third-quarter revenue of $10.15 billion, an increase from $9.69 billion in the third quarter of the previous year.
• Earnings per share (EPS) of 94 cents, a decrease from $1.26 reported in last year's third quarter.

Dollar General has surpassed revenue estimates in six out of the last ten quarters and earnings estimates in five out of the last ten quarters.

According to Placer.ai, visits to Dollar General during the third quarter rose by 4.8% year-over-year, suggesting consistent strength in the retail market for discount and dollar stores.

Analyst Rupesh Parikh from Oppenheimer has a Perform rating with no set price target for the stock. He expressed concerns regarding low expectations for Dollar General, citing potential risks from reduced future guidance and the impacts of recent hurricanes in the southern region.

Parikh stated, "On the top line, we anticipate another sluggish quarter influenced by ongoing challenges in discretionary spending and continued pressure on lower-income consumers." He noted that Dollar General's stock typically struggles following quarterly reports, with shares potentially declining after results are released.

Dollar Tree

Based in Chesapeake, Virginia, Dollar Tree is set to report its third-quarter financial results before the market opens on Wednesday, December 4.

Analysts expect:

• Third-quarter revenue of $7.44 billion, up from $7.32 billion in the same quarter last year.
• Earnings per share (EPS) of $1.07, an increase from 97 cents per share in last year's third quarter.

Dollar Tree has surpassed revenue estimates in six of the last ten quarters as well as EPS estimates in six out of ten quarters.

Data from Placer.ai indicates a 5.3% year-over-year rise in store visits for Dollar Tree, with consistent growth each month in the quarter.

In its second quarter, Dollar Tree initiated a review of strategic alternatives for its Family Dollar business, which may include a sale or spin-off. Investors are eager for updates on this review process.

Five Below

This Philadelphia-based retailer will release its third-quarter financial results after the market closes on Wednesday, December 4.

Analysts are looking for:

• Third-quarter revenue of $795.4 million, compared to $736.4 million in the year-ago quarter.
• Earnings per share (EPS) of 17 cents, down from 26 cents per share a year prior.

Five Below has exceeded revenue estimates in five of the last ten quarters and EPS estimates in five quarters as well.

According to Placer.ai, visits to Five Below increased by 13.8% year-over-year, pointing to a potentially strong quarter ahead. This comes as Five Below opened a record 205 new stores last year to fuel growth for the upcoming holiday season.

Analyst Joseph Feldman from Telsey downgraded Five Below’s stock from Outperform to Sector Perform and adjusted the price target from $102 to $95. He noted that changes in the company’s business model and leadership could require time to stabilize.

"The company adapted to the previous round of tariffs by adjusting its pricing strategy, and some quality issues have emerged that may impact perceived value," Feldman remarked.

What to Expect: Data shows that visits to both Dollar Tree and Dollar General typically rise after Black Friday, peaking in the last full week before Christmas. As such, early commentary regarding the fourth quarter and guidance will be critical when these companies report.

Five Below also experiences increased foot traffic leading up to Christmas, with its busiest shopping day often being Super Saturday, or the Saturday before Christmas. Last holiday, foot traffic surged by 337.3% on Super Saturday compared to its daily average.

Stock Performance:

• Dollar General shares were up 1.62% on Tuesday, trading at $79.04, with a 52-week range from $72.12 to $168.07 and a 43% decline year-to-date in 2024.
• Dollar Tree shares dipped 0.45% to $72.48 on Tuesday, with a 52-week trading range of $60.49 to $151.22, reflecting a 49% year-to-date drop.
• Five Below shares increased by 4%, priced at $103.20 on Tuesday, with a 52-week range of $64.87 to $216.18, and a 52% decline year-to-date.

Future Insights:

The upcoming earnings reports from these discount retailers will be crucial in determining their performance heading into the holiday season, as they seek to attract cost-conscious consumers eager for bargains during this impactful shopping period.

Dollar, General, Earnings