Even bargain chains see spending pullback as higher prices squeeze more Americans

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Dollar Tree is slashing its full-year earnings and sales forecasts as its customers continue to struggle with higher prices and spend less

Dollar Tree is slashing its full-year earnings and sales forecasts as its customers continue to struggle with higher prices and spend less.

Shares tumbled more than 20% Wednesday after hitting a 52-week low on the prior day. The biggest one-day sell-off for Dollar Tree shares in more than 20 years arrived less than a week rival bargain chain Dollar General reported a dismal quarter and suffered its largest single-day slump ever.

Dollar Tree has been trying to lure customers from other retailers using its rock-bottom prices, but juggernauts like Walmart and Target have also said their customers are under pressure and they’re cutting prices, too.

That has left little leeway for bargain stores because huge chains like Target are cutting prices on groceries, a huge draw for customers who are likely to shop for other items at Target and skip an additional trip to a dollar store.

“Dollar stores have lost market share to larger retailers that have broadened their offerings and gained customer loyalty through everyday low prices,” said Jharonne Martis, director of consumer research, analytics and AI at LSEG.

And the economic headwinds that first hit low-income customers at Dollar Tree appear to be climbing upward to those who are better off, according to company executives.

“Dollar Tree has a broader customer base that includes more middle and upper-income households and beginning this quarter, we started to see inflation, interest rates, and other macro pressures have a more pronounced impact on the buying behavior of these customers,” said Chief Operating Officer Mike Creden.

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