Dollar Tree cuts annual profit forecast on slowing demand

Dollar Tree Inc (DLTR.O) on Thursday cut its annual profit forecast as high inflation dampens demand for higher-margin items such as party supplies and fashion accessories, sending shares of the company down 11%.

A fall in demand for higher-margin discretionary goods, typically more profitable than perishables like snacks and cookies, has further dented margins at a time when freight and labor expenses remain elevated despite easing from their highs.

“We expect the elevated shrink and unfavorable sales mix to persist through the balance of the year,” CEO Rick Dreiling said in a statement.

Last week, big-box retailer Target Corp (TGT.N) forecast second-quarter profit below Wall Street expectations, while Home Depot Inc (HD.N) projected a greater earnings fall than had been anticipated owing to escalating cost pressures.

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