Nov 27, 2019 - Economy & Business

Dollar Tree says the U.S.-China trade war will cost it $19 million in Q4

A Dollar Tree store in California. Photo: Frederic J. Brown/AFP via Getty Images

Dollar Tree said acceleration of the trade war with China would up its costs by $19 million in Q4.

Why it matters: Even as the Trump administration says it’s close to a "phase one" trade deal with China, corporations are bearing down and preparing Wall Street for the worst-case scenario.

  • The administration has been mum on whether or not new tariffs on about $300 billion worth of Chinese imports will take effect on Dec. 15.

What they’re saying: “Obviously, the biggest unknown as we sit here today for us and many other retailers is tariffs and where [that lands] at the end of the day,” Dollar Tree CEO Gary Philbin told analysts after the company, which also owns Family Dollar, reported earnings on Tuesday.

  • Shares dropped by as much as 15% after the company reported earnings that fell short of estimates and it pared back Wall Street’s profit expectations for the following quarter.
  • The company blamed “continued uncertainty regarding trade and the related tariffs,” per a release.
  • The company’s cost of goods sold jumped 4.5% year-over-year.

The bottom line: Dollar Tree, which makes its name on inexpensive products, is taking action to hold the line on prices.

  • “We are moving some product out of China, we’re sourcing to elsewhere, we are redesigning product,” Philbin told CNBC.

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