Will Dollar Stores Shipping Hikes Affect Your Arbitrage Prices
Shipping Prices Are Squeezing Profits At Dollar Stores!
It’s no secret variety stores profit by arbitrage, but this good thing may come to an end as dollar stores shipping hikes squeeze profits.
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According to Reuters, top U.S. dollar companies said their full-year profits will take a bigger hit than feared due to surging transportation costs, with Dollar Tree Inc (DLT.O) warning that an acute shortage of shipping capacity could hurt store inventories.
Dollar Tree shares fell 9% on Thursday after the company cut its full-year profit forecast and rival Dollar General Corp (DG.N) dropped 6%.
Increasing freight costs caused by bottlenecks at ports as economies reopen and other pandemic-caused global supply-chain disruptions have hit companies across industries.
And, are likely to especially torment dollar stores that sell products at lowest possible prices.
Dollar Tree, one of the top U.S. retail importers, said it expects its ocean carriers to fulfill only 60%-65% of their contractual commitments this year,.
They’re blaming container ship shortages, delays in U.S. and Chinese ports and the lingering effects of the Suez Canal blockage for the shortfall.
Leading international shipping groups have warned clients of delays after a container port in China’s eastern marine hub at Ningbo slowed processing partly due to stricter disinfection measures under the country’s “zero-tolerance” coronavirus policy.
The Dollar Tree banner imports more containers per $100 million in sales than other large retailers, and combined with our low $1 price point, we have an outsized impact from freight costs.
Chief Executive Officer Michael Witynski
Meanwhile, Dollar General said higher transportation costs significantly contributed to an 80 basis point decline in its second-quarter gross profit margin and it fears a bigger jump in supply chain costs in the second half of the year than expected.
It now expects fiscal 2021 earnings per share (EPS) of $9.60 to $10.20, below analysts’ average estimate of $10.24, according to IBES data from Refinitiv.
Dollar Tree expects 2021 EPS of $5.40 to $5.60, compared with its prior forecast of $5.80 to $6.05.Reporting by Uday Sampath in Bengaluru; Editing by Shinjini Ganguli
Our Standards: The Thomson Reuters Trust Principles.
Rural Money Editor: Many people take advantage of online sales platforms such as eBay or Amazon, and sell products that they find at dollar stores and/or at cut-rate prices elsewhere.
They arbitrage the difference in their purchase and sale prices, but dollar 💲 stores won’t eat these shipping increases.
They will pass them along to consumers and small variety stores as a consequence of inflation.
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Aggregated From Reuters Read It Here Enhanced By Rural Money
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