Dollar Tree tops estimates; expects tariff hit in Q2
Dollar Tree reported a strong first quarter as more higher-income consumers shopped its stores for bargains, but warned that tariffs could take a toll on its second-quarter earnings.
The discount giant forecast its second-quarter adjusted profit from continuing operations (which excludes its Family Dollar unit) to be down as much as 45% to 50% from a year ago amid volatility resulting from tariff uncertainty before re-accelerating in the third and fourth quarters.
In March, Dollar Tree entered into an agreement to sell its Family Dollar business to private-equity investors Brigade Capital Management and Macellum Capital Management for $1 billion. The deal is expected to close in the second quarter of fiscal 2025.
Dollar Tree added 2.6 million new customers during the quarter, with most of them from households earning $100,000 or more annually, CEO Mike Creedon said on the company's earnings call.
"Higher-income customers have been a meaningful growth driver for us,” he told analysts.
Dollar Tree reported net income of $343.4 million, or $1.47 per share, for the quarter ended May 3, compared to $300.1 million, or $1.23 a share, in the year-ago period. Adjusted earnings were $1.26 a share, topping estimates of $1.21 per share.
Net sales increased 11.6% to $4.64 billion. Analysts had expected sales of $4.54 billion. Same-store net sales rose 5.4%. Traffic increased 2.5% and the average ticket was up 2.8%.
Dollar Tree opened 148 new stores during the quarter, including its 9,000th location. It also converted approximately 500 stores to its multi-price format.
“Our strong first quarter performance underscores the progress we’ve made against our strategic priorities and is a clear signal that our customers are responding positively to the changes we are making,” stated Creedon in the earnings release. “History has shown that we have the resilience to emerge stronger from periods of economic uncertainty and in today’s rapidly evolving environment, we see a meaningful opportunity to further elevate the value, convenience, and discovery that our customers depend on Dollar Tree to provide.”
For the full year, Dollar Tree continues to expect net sales between $18.5 billion and $19.1 billion, with comparable store net sales growth between 3% and 5%, but it raised its guidance range to $5.15 to $5.65 a share from $5 to $5.50 a share,
Dollar Tree said its full-year outlook assumes that the level of tariffs in place as of June 4, 2025 remain in effect for the balance of the fiscal year.
“It further assumes that we will be able mitigate most of the incremental margin pressure from higher tariffs and other input costs,” the company said.
The company operated 16,607 stores across 48 states and five Canadian provinces as of May 3, 2025. Stores operate under the brands of Dollar Tree, Family Dollar and Dollar Tree Canada.
