Dollar Tree Stock Falls. ‘Elevated Shrink’ Leads to Profit Guidance Cut.

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Dollar Tree

stock was falling Thursday after first-quarter earnings missed estimates and the discount retailer slashed its fiscal-year profit outlook. It’s also the latest retailer seeing theft dent profits.

Dollar Tree

(ticker: DLTR) posted first-quarter adjusted earnings of $1.47 a share, lower than analysts’ estimates of $1.52.

Sales for the quarter were $7.32 billion, rising 6.1% from a year ago, and higher than Wall Street’s call for $7.28 billion.

“While we are maintaining our full-year 2023 sales outlook, we are adjusting our EPS outlook as we expect the elevated shrink and unfavorable sales mix to persist through the balance of the year,” said CEO Rick Dreiling in a press release. “We still expect earnings to be more back-end loaded this year as the benefits of lower ocean freight rates flow through.”

For the fiscal year, sales are expected at between $30 billion and $30.5 billion, nearly aligning with previous guidance of $29.9 billion to $30.5 billion. Earnings were forecast at between $5.73 and $6.13 a share, down from a prior range of $6.30 to $6.80.

Shares of Dollar Tree lost 11% to $138 in premarket trading Thursday.

Dollar Tree is more dependent on discretionary items for its sales than fellow discounter

Dollar General

(DG), so the latter may not be as downbeat when it reports results next week.

That said, Dollar Tree’s disappointment speaks to how many lower-income consumers are being forced to skip buying things they want in order to afford necessities. Results and cautious commentary spanning retailers from

Target

(TGT) to

Foot Locker

(FL), and

Burlington Stores

(BURL) all demonstrated that many Americans are still sticking strictly to a budget, a phenomenon that’s not happening as readily at the high end to judge by strength at the likes of

Ralph Lauren

(RL) and

Urban Outfitters

‘ (URBN) Free People and Anthropologie brands.

Dollar Tree also joined the unenviable club of retailers grappling with “shrink,” an industry term that refers to lost inventory and encompasses theft. While the average customer may feel the urge to get sticky fingers as inflation has pushed up prices, retailers’ main concern has been increasingly violent, organized rings of thieves that are stealing millions of dollars worth of products.

Just over a week into retail earnings season, companies including Target,

Walmart

(WMT),

Home Depot

(HD), and

TJX Cos.

(TJX) have mentioned the problem in their press releases and conference calls. For its part,

Dollar General

also highlighted shrink when it previously reported results in March.

Write to Emily Dattilo at emily.dattilo@dowjones.com