Dollar Tree Q1 Same-Store Sales Jump 5.4%, Warns Of Near-Term Profit Drop On Tariff Pressure, Transition Costs

Dollar Tree Inc. DLTR stock is trading lower during the premarket after its first-quarter 2025 earnings report.

Net sales increased 11.3% to $4.6 billion, beating the consensus of $4.53 billion and the management guidance of $4.5 billion—$4.6 billion.

Same-store net sales increased 5.4%, driven by a 2.5% increase in traffic and a 2.8% increase in average ticket, beating the management guidance growth of 3% – 5%.

6.4% consumables comp and 4.6% discretionary comp – highest discretionary comp growth since Q4 2022.

On Wednesday, Dollar Tree reported adjusted earnings of $1.26 per share, beating the analyst estimate of $1.21, better than management expectation of $1.10 – $1.25.

Also Read: Dollar Tree Surges Nearly 8% After Citi Upgrade: Analysts Say Tariffs Could Boost Margins, Not Hurt Them

Gross profit increased 11.7% to $1.6 billion. The gross margin expanded 20 basis points to 35.6%, driven primarily by lower freight, improved mark-on, and lower occupancy costs due to sales leverage, partially offset by increased distribution, shrink, and markdown costs.

Adjusted operating income increased 1.4% to $387.8 million, and adjusted operating margin contracted 80 basis points to 8.4%.

In March, the company agreed to sell the Family Dollar business to Brigade and Macellum for $1.007 billion. Net proceeds are estimated to total approximately $800 million. Additionally, Dollar Tree expects the economic impact of tax benefits from losses on the sale to be approximately $350 million. The deal is expected to close in the second quarter of fiscal 2025.

Fiscal Outlook

Dollar Tree reaffirms fiscal year 2025 sales guidance of $18.5 billion—$19.11 billion versus a consensus of $18.95 billion, based on comparable store net sales growth of 3% to 5%.

The company said its outlook assumes the current tariff level remains in effect for the balance of the fiscal year and that it will be able to mitigate most of the incremental margin pressure from higher tariffs and other input costs.

The company raised its adjusted earnings guidance from $5.00-$5.50 per share to $5.15-$5.65 per share compared to analysts estimate of $5.21.

As Dollar Tree will bear the full year of the costs to support Family Dollar but only expects to receive offsetting reimbursement income in the second half of the year, the company’s full-year earnings will be negatively impacted by approximately 30 cents to 35 cents per share, with that impact concentrated in the first two quarters of the fiscal year.

Second Quarter 2025 Outlook

Given trends and expectations for the balance of the quarter, Dollar Tree expects Q2 comparable net sales growth to be towards the higher end of its full-year outlook range of 3% to 5%.

Over the balance of fiscal 2025, the company expects to mitigate the earnings impact of the cost pressures it faces, including higher tariffs.

In the near term, it expects to see some earnings volatility based on the timing of the various inputs and outputs to the company’s financial results.

The company expects that the second-quarter adjusted EPS from continuing operations could be down as much as 45% to 50% year-over-year before re-accelerating in the third and fourth quarters to meet its full-year earnings outlook.

On Tuesday, the company’s rival Dollar General Corporation DG stock closed around 16% higher at $112.57 after the company reported first-quarter 2025 earnings.

Dollar Tree updated its expectations for the year, primarily to reflect its outperformance in the first quarter and the tariff uncertainty. It now expects fiscal year 2025 sales growth of approximately 3.7% to 4.7%, compared to its previous expectation of approximately 3.4% to 4.4%.

Same-store sales growth is expected to be approximately 1.5% to 2.5%, compared to its previous expectation of approximately 1.2% to 2.2%

Price Action: DLTR shares traded higher by 3.10% at $69.22 in premarket at last check Wednesday.

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