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2024-05-01 01:30
Updated April 30 13:37ET:
With the extensive damage to its distribution center from this weekend’s tornado in southern Oklahoma, Dollar Tree (NASDAQ:DLTR) shares have been under pressure Monday, dragging down shares of Dollar General (DG) and Five Below (FIVE) in sympathy.
The outbreak of deadly tornados in the state left five people dead and billions of dollars in damage, taking with it most of the million-square foot Dollar Tree (DLTR) Marietta distribution center, one of only 15 distribution centers operated by the discount retailer.
“While we remain bullish on DLTR given strong results from [Dollar Tree] and the turnaround potential from [Family Dollar] as the company invests needed capital into the banner, this unfortunate event is certainly a negative,” said Truist analyst Scot Ciccarelli, adding that, as there will likely be some “operating pressures for a longer-period of time as other [distribution centers] are forced to pick up the lost capacity.”
Not only will the company face the financial hit from having to rebuild the decimated distribution center and loss of inventory, but the impact from depleted stocks in the roughly 550 stores across 11 states that were served by the distribution center will also weigh on the company.
Update: Dollar Tree confirmed that the Marietta distribution center sustained "significant" damage, although none of the employees at the facility were injured.
Additionally, the company's insurance policies include significant property and inventory coverage which is expected to cover the majority of damages and recovery costs.
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