Dollar Tree cuts profit forecast as costs rise

Pedestrians walk past a Dollar Tree Inc. store in Detroit, Michigan, U.S.
Sean Proctor | Bloomberg | Getty Images

Dollar Tree cut its full-year profit forecast on Thursday, citing costs related to store closures and freight, sending its shares down 4% in trading before the bell.

The company said the forecast includes the impact of tariffs that have been imposed on Chinese imports, but does not account for a potential hit from additional levies.

"If tariffs on List 4 products are implemented, we expect that it will be impactful to both our business, and especially to consumers in general," Chief Executive Officer Gary Philbin said in a statement.

The discount store operator cut its full-year earnings forecast to between $4.77 and $5.07 per share, including a 10- cent hit from store closures and a 5-cent impact from import freight costs.

Dollar Tree had earlier forecast full-year earning in the range of $4.85 to $5.25 per share. The company reported a 2.5% rise in same-store sales at its Dollar Tree stores in the first quarter ended May 4. Analysts on average had expected a 2.9% increase, according to IBES data from Refinitiv.

Net income rose to $267.9 million, or $1.12 per share, in the quarter from $160.5 million, or 67 cents per share, a year earlier.