03:48 PM EDT, 05/21/2024 (MT Newswires) -- Dollar Tree ( DLTR ) will likely report soft fiscal first-quarter results in the coming weeks amid more conservative comparable sales growth views, Oppenheimer said on Tuesday.

The brokerage lowered its first-quarter earnings per share target to $1.38 from $1.41, moving further below the $1.43 consensus view. The discount retailer's guidance was for EPS in the $1.33 to $1.48 range. Oppenheimer forecasts revenue of $7.51 billion, below the $7.67 billion average analyst estimate on Capital IQ.

"We expect a challenging start to the year and still see risks to full-year guidance," Oppenheimer analysts including Rupesh Parikh and Erica Eiler said in a note. Dollar Tree's ( DLTR ) shares may bottom around $105 to $110, according to the report.

The analysts' updated views reflect more conservative comparable sales growth assumptions amid ongoing discretionary challenges, unfavorable weather and potential disruptions to the company's multi-price rollout.

Oppenheimer's in-store checks revealed empty shelves during the implementation of multi-price points. On Dollar Tree's ( DLTR ) earnings conference call in March, Chief Executive Rick Dreiling said the company introduced $3 and $5 center store merchandise to about 5,000 stores by the end of 2023, with plans to add another 2,000 locations this year. The company plans to introduce price points going up to $7, Dreiling said, according to a Capital IQ transcript.

Following a series of powerful tornadoes that caused significant damage to Dollar Tree's ( DLTR ) one million square foot distribution center in Marietta, Oklahoma, late last month, management might trim its full-year guidance, according to Oppenheimer. A reduced outlook would likely reflect a loss of sales and increased costs, Parikh and Eiler said.

Oppenheimer lowered its full-year EPS estimate to $6.55 from $6.75, moving further below the $6.90 consensus. Management's guidance is for EPS of $6.70 to $7.30 for the ongoing year.

While Dollar Tree's ( DLTR ) effort to more aggressively close down stores is encouraging, it's likely not enough to drive a sustained turnaround amid consumer and competitive headwinds, according to the analysts. "We would characterize expectations as quite low amidst management execution challenges and increased skepticism on the Family Dollar turnaround," they wrote.

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