Dollar Tree Stores (NYSE: DLTR) saw its shares decline Monday after an analyst from JPMorgan (NYSE: JPM) said the stock price for the discount retailer is already too high in light of declining consumer spending.That's all well and good (and somewhat true), but for a retail store "where everything is a dollar," it's hard to see the core customer contingent of Dollar Tree curbing spending for all those $1 items any time soon. In fact, wouldn't logic say that more people may visit Dollar Tree for all those household goods as all those collective belts are being tightened?
Dollar Tree shares lost over 6% based on the analyst's comment, and they now stand at a little over $37 this morning. The downgrade from Neutral to Underweight caused the shares to close just over $35 on Monday, and have since recovered slightly.
The general reasons were given in the downgrade, including the macro economic environment of the U.S. spending scenario at the moment -- particularly for lower-income households (Dollar Tree's core customer) -- as Dollar Tree was mentioned along with discount retailers Family Dollar Stores (NYSE: FDO) and Wal-Mart (NYSE: WMT). Will Dollar Tree's $1 pricing model really fall under pressure soon due to so many consumer spending issues? With a 25% stock price rise this year alone, perhaps it is time for the shares to cool off a little. I'm just not convinced we'll see a flock of customers abandon $1 products.
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Reader Comments (Page 1 of 1)
11-10-2007 @ 11:22AM
leonardRUSSO said...
dear sirs; i am a loyal dollar tree customer for many years.I have
I have patronized your store #491toms river new jersey 08753. I WISH TO TELL YOU OF MY DISSATISFACTION WITH STORE# 491 . THE PRODUCT MIX HAS CHANGED TO MY CHAGRIN . I WAS ABEL TO BUY PEIDREE DOG FOOD AND OTHER TREETS AND NAME BRAND FOOD BUT THE EMPLOYEES TOLD ME THEY CAN NOT ORDER AND ITEM BUT THE OFFICE SENDS WHAT THEY WANT. I OWN YOUR STOCK AND I WILL SELL IT BECAUSE YOU ARE NOT SATSATISFYING THE CONSUMER .GREAT LOCATION BAD MANAGEMENT
11-10-2007 @ 11:20AM
leonardRUSSO said...
I WANT TO BE YOUR CUSTOMER BUT YOU MAKE IT DIFFICULT. PLEASE RETURN TO THE GREAT DOLLAR TREE STORE YOU WERE BEFORE