Discount retailer Dollar Tree (NASDAQ:DLTR) has come into the crosshairs of the Food and Drug Administration (FDA) over continued sales of recalled products.
The Recalled Products
The products in question are the WanaBana Apple Cinnamon Fruit Puree pouches. Wanabana USA had voluntarily recalled the pouches in October 2023 due to lead and chromium contamination. However, these pouches continued to be sold at Dollar Tree stores weeks after the recall.
The FDA’s Stance
The lead-tainted fruit pouches were associated with illnesses in more than 500 children. Dollar Tree noted that it refused sales of the fruit pouches at registers. However, the measure fell short of FDA standards, as at least one child consumed the recalled product in a store prior to purchase, according to USNews.
Dollar Tree’s Recent Actions
Exposure to elevated lead levels in products can lead to acute lead toxicity in humans. The FDA has warned that any failure to address this matter could result in legal action against Dollar Tree. Meanwhile, Dollar Tree, which operates over 16,000 outlets, has outlined its recent actions to execute product recalls rapidly. These actions include investments in compliance functions, the addition of new Legal and Ethics & Compliance heads, the establishment of a new cross-functional task force to execute product recalls, and the implementation of new processes and checks at the store level.
The FDA’s warning to Dollar Tree comes amidst already weak investor sentiment in the stock. The company has been on a store-closing spree in recent months and plans to sell its Family Dollar business.
Is DLTR Stock a Buy, Sell, or Hold?
Shares of the company have tanked by nearly 20% over the past six months. Overall, the Street has a Moderate Buy consensus rating on the stock, alongside an average DLTR price target of $139.88.
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