Discount retailer Dollar Tree Inc’s (DLTR.O) quarterly sales rose less than analysts had expected as it focused on integrating Family Dollar stores amid intense competition from mass retailers such as Wal-Mart Stores Inc (WMT.N).
Shares of the company, which also forecast current-quarter sales below Wall Street’s estimates, fell as much as 8.6 percent to $69.68 in early trading on Tuesday.
Analysts had touted Dollar Tree’s acquisition of Family Dollar as a game changer for the smaller discount retailer, as it propelled the company to the No. 1 spot among U.S. discount chains dethroning Dollar General Corp (DG.N).
But they had also cautioned that integrating Family Dollar would be challenging as the company had been struggling with pricing, merchandising and store layout issues.
“While we would not go so far as to say that Dollar Tree acquired a troubled retailer, in purchasing Family Dollar it did take on a retail entity where operational efficiencies and strategic efficacy are quite some way below its own abilities,” research firm Conlumino’s CEO Neil Saunders said on Tuesday.