Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of discount retail chain Dollar Tree
So what: Just 15 days after a software glitch at Knight Capital Group
What really matters is Dollar Tree's third-quarter guidance released this morning, which places its total expected revenue range of $1.71 billion-$1.75 billion on EPS of $0.47-$0.51 below Wall Street's forecasts for $1.77 billion in sales and a profit of $0.52.
Now what: As for the trading glitch, it'll be looked at and perhaps we'll know more about what happened by next week. Dollar Tree's guidance, however, isn't something you can just look past. I've been saying for months that dollar stores have been priced for perfection. A mixture of low wage growth and rising food prices has pinched consumers to the point that I couldn't figure out how dollar stores would squeeze any more out of their customer base. Dollar Tree's warning today is a confirmation that the tide is shifting. I've made CAPScalls of underperform on Family Dollar Stores
Craving more input? Start by adding Dollar Tree to your free and personalized Watchlist so you can keep up on the latest news with the company.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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