Dollar Tree plummets 17% after slashing its profit forecast over trade-war issues

• Dollar Tree reported third-quarter earnings Tuesday that fell short of Wall Street's expectations. The company also slashed its full-year profit guidance due to uncertainty around tariffs.
• Shares of the company fell as much as 17% on the news.
• The company said that the global helium shortage, higher freight and distribution costs, and higher sales of low-margin goods also weighed on the quarter.
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Dollar Tree is suffering its biggest intraday drop since 2012 over the effect of tariffs.

Shares of the discount retailer fell as much as 17% Tuesday after the company reported disappointing third-quarter earnings and lowered its full-year guidance due to uncertainty around the trade war and tariffs.

Here's what the company reported, versus what analysts surveyed by Bloomberg expected:

• Adjusted earnings per share: $1.08 reported versus $1.08 (expected)
• Revenue: $5.75 billion reported versus $5.74 billion (expected)
• Same-store sales: +2.5% reported versus +2.6% (expected)

Dollar Tree lowered both its fourth-quarter and full-year guidance due to the potential impact of tariffs. For the full year, Dollar Tree expects earnings per share to be between $4.66 and $4.76, below its previous estimate of earnings between $4.90 and $5.11 per share.

It now forecasts fourth quarter earnings per share between $1.70 and $1.80, where analysts expected $1.94 per share.

Dollar Tree expects that tariffs placed on Chinese imports, if fully implemented, will boost cost of goods sold by approximately $19 million in the fourth quarter. That means earnings per diluted share will fall about 6 cents, the company expects. It remains undetermined whether a new tariff increase will take place on December 15.

"Fiscal 2019 has been a unique year as the result of several factors," including the global helium shortage and continued uncertainty regarding trade and the related tariffs, said Gary Philbin, Dollar Tree's CEO, in a press release.

The company also said that increased sales of lower-margin goods and higher freight and distribution costs negatively affected gross margin, which sank to 29.7% in the quarter from 30.2% a year earlier.

As the trade war between the US and China continues on, retailers and consumers are still caught in the crosshairs. A recent report from the New York Federal Reserve showed that increased tariffs on China are falling mostly on US consumers and businesses.

Dollar Tree has a consensus price target of $116.20 and 16 "buy" ratings, 10 "hold" ratings, and one "sell" rating, according to Bloomberg data.

Dollar Tree is up 24% year-to-date through Monday's close.