Dollar Tree Earnings: Margins Pressured by Turnaround Strategy and Weaker Discretionary Spending

No-moat Dollar Tree posted third-quarter results that modestly trailed our expectations as inflationary pressure and reduced fiscal stimulus weighed on discretionary spending for low-income consumers. Amid an uncertain demand backdrop and the firm's commitment to aggressively investing in operational improvements, we maintain our view that financial performance will likely be choppy in the near term. As such, we do not plan to alter our $110 fair value estimate materially.