shares of dollar Tree The drop hit a 52-week low on Thursday after the retailer said customers’ shopping lists had been largely limited to food and necessities.

The discounter joins a growing group of retailers serving consumers who have become more price-sensitive and selective about spending. Macy’s And foot Locker Also reported this week sales have been affected as customers Exclude Discretionary Items BroadlyAs they deal with rising interest rates and expenses like commuting, eating out and paying for more expensive groceries.

On a call with investors, Dollar Tree CEO Rick Dreiling said customers’ buying patterns reflect a difficult economic backdrop and a change in spending habits from before the pandemic.

“While the challenging macro environment continues to exert pressure on our sales mix in both segments, I am pleased with the growth in traffic, new customers and market share,” he added.

Dollar Tree, which includes its namesake banner and the more grocery-focused Family Dollar, saw its share price drop 10% — even though it beat Wall Street’s fiscal second-quarter expectations.

The company raised its full-year forecast for sales, but lowered its outlook for earnings. Dollar Tree said the guidance reflects better sales, and lower margin purchases such as food, ongoing challenges with shrinkage, a term used for lost, damaged or stolen goods, and higher diesel fuel costs. Attributed to profit margin.

Dollar Tree now expects consolidated net sales for the full fiscal year to range from $30.6 billion to $30.9 billion, and earnings per share of $5.78 to $6.08. It previously forecast consolidated net sales of between $30.0 billion and $30.5 billion and earnings per share of between $5.73 and $6.13. Dollar Tree’s guidance disappointed Wall Street, as its earnings bottom line fell short of consensus expectations.

Here’s how the company performed for the three-month period ended July 29, compared with Wall Street’s expectation, based on a survey of analysts by Refinitiv:

  • Earnings per share: 91 cents versus the 87 cents expected
  • Revenue: $7.32 billion vs. $7.18 billion expected

Net income fell to $200.4 million, or 91 cents per share, from $359.9 million, or $1.61 per share, a year earlier.

Total revenue increased from $6.77 billion in the year-ago period.

Same-store sales grew 6.9% across the company. At the Dollar Tree chain, same-store sales increased 7.8% and for Family Dollar, same-store sales increased 5.8% year over year.

Dollar Tree is in the midst of a sweeping effort to redesign its stores and price points. Dreiling, former executive chairman of the company’s board and former CEO of rival dollar generalHe has led change since he was Was named chief executive of Dollar Tree earlier this year.

The company has expanded its range of items to include items sold at higher prices, such as frozen and refrigerated items that are sold for $3, $4, and $5.

During the second quarter, Dollar Tree’s margins were hurt by shoppers insisting on buying food and essentials, which are less profitable. Along with the spending changes, the company’s profits were hit by higher expenses, including wage increases for store employees, investments in store renovations, and larger utility bills due to hot summer weather in much of the country.

Its margins also shrunk compared to the year-ago period when it increased prices from $1 to $1.25 in a phased manner.

More retailers have also reported shrinking as a challenge, as some thieves steal items to sell on third-party marketplaces. On a call with investors, Dreiling said the retailer is introducing new approaches to prevent theft in the back half of the year. Those efforts have included moving and locking up some cargo and even shutting down some highly targeted items.

At both chains, shoppers made more frequent visits to stores in the second quarter. The Dollar Tree chain saw a nearly 10% increase in traffic, but a 1.6% drop in the average amount spent by customers visiting the store. At Family Dollar, traffic increased approximately 3% and average ticket grew approximately 2%.

Separately, US regulatory announced agreement This week, along with Dollar Tree and competitor Dollar General, both were issued workplace safety violations. As part of the agreement, retailers must fix hazards to employees, such as blocked exits and unsafe storage of materials.

In a statement, Dollar Tree COO Mike Creedon said the company is “implementing adequate security policies, procedures and training aimed at protecting the well-being of our associates.”

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