Dollar Tree (NASDAQ:DLTR) to Face Many Hurdles in the Coming Times


Dollar Tree (NASDAQ:DLTR) has been enjoying good gains in the past couple of months. Its stock has gone up by 20 percent in the past three months and 35 percent higher from the jolts it took last February. This growth is often associated with the acquisition activity it has been carrying out lately. Customers have been appreciating the customer friendly products which led to best same store sales in three years. Though Dollar Tree (NASDAQ:DLTR)’s position looks strong now, there are chances that the company might come across hurdles that will affect the company’s steady growth.

One particular area that Dollar Tree (NASDAQ:DLTR) is wary of is the fuel prices. Dollar Tree (NASDAQ:DLTR) is enjoying low diesel prices which have largely helped Dollar Tree (NASDAQ:DLTR) post healthy quarters. Last quarter reported that Dollar Tree (NASDAQ:DLTR)’s fuel cost was down by 0.13 dollar which wasn’t substantial but was better than a price hike. There is also a chance that these fuel prices go down in coming times but should the prices hike, Dollar Tree (NASDAQ:DLTR) will get no room for posting a profit.

Most of its finances will be spent upon covering the fuel price, since diesel already is expensive enough. Truck drivers have been giving Dollar Tree (NASDAQ:DLTR) a rough time with their strike as Dollar Tree (NASDAQ:DLTR) is short on truck drivers. On top of that the freight costs have already shrunk Dollar Tree (NASDAQ:DLTR)’s gross margin. These truck drivers are protesting at ports against low pay, benefits and automation.

The Los Angeles port and Long Beach port are included and these ports are the largest ports in U.S with most of the goods shipped coming. The work is slowing down at these ports costing Dollar Tree (NASDAQ:DLTR) millions. And to add insult to the injury, this is the busiest time of the year at the ports. Dollar General (NYSE: DG) and Dollar Tree (NASDAQ:DLTR) are both aiming to acquire Family Dollar (NYSE: FDO). Family Dollar (NYSE: FDO) in this case has got variety of price points in its stores compared to Dollar Tree (NASDAQ:DLTR)’s 1 dollar price of everything.

Dollar Tree (NASDAQ:DLTR)’s operating margins are high but the acquisition target is quite low. Dollar General (NYSE: DG) will have to close more stores than Dollar Tree (NASDAQ:DLTR) and Family Dollar (NYSE: FDO) itself seems more inclined towards Dollar Tree (NASDAQ:DLTR) but even if Dollar Tree (NASDAQ:DLTR) manages to win the deal, it won’t change the poor performance of the company and there is a chance Dollar Tree (NASDAQ:DLTR) might suffer losses in an attempt to overturn Family Dollar (NYSE: FDO)’s performances.

On this note all we can say that Dollar Tree (NASDAQ:DLTR) shouldn’t stick its nose where it doesn’t belong and should focus on the business that is generating revenue for it already. The hurdles are quite clear and Dollar Tree (NASDAQ:DLTR) should look to avoid or tackle them as soon as possible because Dollar Tree (NASDAQ:DLTR) is enjoying a great run and it’ll be a shame if it is interrupted.