Dollar Tree, Inc. (NASDAQ:DLTR) stock climbed Wednesday after the retailer delivered stronger-than-expected quarterly results and healthy sales growth.
Management highlighted momentum from its multi-price strategy and a record Halloween season while tightening its outlook and lifting profit guidance.
The company reported third-quarter adjusted earnings per share of $1.21, beating the analyst consensus estimate of $1.08.
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Quarterly sales of $4.746 billion (+9.4% year over year) outpaced the Street view of $4.699 billion.
Dollar Tree reported a solid 4.2% increase in same-store net sales driven by a 4.5% increase in average ticket and a 0.3% decline in traffic.
The company has also returned capital to shareholders with $1.5 billion in share repurchases year-to-date.
“Our multi-price strategy drove strong momentum across our business in the third quarter and helped deliver an all-time record Halloween season,” said Mike Creedon, Chief Executive Officer.
“With 85% 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.”
Margin analysis
Gross profit increased 10.8% to $1.7 billion, and gross margin increased 40 basis points to 35.8%. The expansion in gross margin was primarily driven by improved mark-up from pricing initiatives, lower domestic and import freight costs, and a favorable sales mix.
Adjusted operating income increased 4.1% to $345.3 million, and adjusted operating margin decreased 30 basis points to 7.3%.
The company opened 106 new Dollar Tree stores during the period. It also converted approximately 646 locations to the Dollar Tree 3.0 multi-price format.
Balance Sheet Details
As of Nov. 1, 2025, the company had $2 billion remaining under its $2.5 billion share repurchase authorization and $594.8 million in cash and cash equivalents.
It also had $620 million of commercial paper notes outstanding and no borrowings under its credit facilities.
Year-to-date, it generated $958.5 million in operating cash flow and $88.2 million in free cash flow from continuing operations.
Outlook
Dollar Tree raised its fiscal 2025 adjusted earnings guidance to a range of $5.60 to $5.80 per share, up from $5.32 to $5.72, compared with the $5.51 consensus estimate.
The company also narrowed its fiscal 2025 sales outlook to $19.35 billion to $19.45 billion from $19.30 billion to $19.50 billion, versus the $19.433 billion analyst estimate.
Dollar Tree expects fourth-quarter adjusted earnings of $2.40 to $2.60 per share, compared with the $2.41 analyst consensus.
The company forecasts sales of $5.4 billion to $5.5 billion, versus Wall Street’s $5.416 billion estimate.
DLTR Price Action: Dollar Tree shares were up 1.84% at $111.00 during premarket trading on Wednesday, according to Benzinga Pro data.
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