Dollar Tree posts strong Q3 on heels of ‘record’ Halloween sales, lifts guidance
Dollar Tree Inc. reported an upbeat third quarter that beat Street estimates and raised its full-year earnings outlook as its multi-price format continues to attract more higher-income shoppers.
On the company's earnings call, CEO Mike Creedon said that Dollar Tree had 3 million more households shop with the chain during the third quarter of this compared to last year.
“Approximately 60% of these incremental shoppers came from high-income households, those earning over $100,000," he told analysts.
The retailer opened 106 Dollar Tree stores during the quarter, and converted approximately 646 stores to its multi-price format. The format includes some higher-margin items at $3, $4, and $5 while preserving the core price point.
The discounter's net income increased 4.8% to $244.6 million for the quarter ended Nov. 1. Adjusted earnings per share totaled $1.21, easily beating analysts’ estimates of $1.09 per share.
Gross profit increased 10.8% to $1.7 billion, while gross margin expanded 40 basis points to 35.8%, supported by improved pricing, lower freight costs and a favorable product mix.
Net sales increased 9.4% to $4.74 billion, just ahead of estimates. Same-store net sales increased by 4.2%, driven by a 4.5% increase in average ticket which offset a 0.3% decline in traffic.
"Our multi-price strategy drove strong momentum across our business in the third quarter and helped deliver an all-time record Halloween season,” said Creedon in the earnings release. “With 85 percent of our assortment priced at two dollar or less, we continue to deliver exceptional value, while our multi-price assortment allows us to offer even more high-quality products and great gift options for the holidays.”
Dollar Tree raised its fiscal 2025 guidance range for adjusted earnings per share to $5.60 to $5.80 from $5.32 to $5.72, and its comparable-store sales growth outlook to 5% to 5.5% from 4% to 6%. The company narrowed its sales outlook to between $19.35 billion and $19.45 billion from between $19.3 billion and $19.5 billion.
Dollar Tree operates 9,269 stores and 18 distribution centers across 48 contiguous states and five Canadian provinces under the Dollar Tree and Dollar Tree Canada banners.
