✎ Contributed by Ty Griffin
Dollar Tree Inc. reported robust first-quarter results, surpassing expectations with adjusted earnings per share of $1.26 and revenue of $4.64 billion. Comparable store sales rose by 5.4%, driven by increased customer traffic and higher average transaction values.
However, the company warned that escalating tariffs, including a 145% levy on certain Chinese imports, could reduce second-quarter earnings per share by 45% to 50% year-over-year. This anticipated decline is attributed to an estimated $70 million in additional costs.
Despite these challenges, Dollar Tree raised its full-year adjusted EPS guidance to a range of $5.15 to $5.65, up from the previous forecast of $5.00 to $5.50. The company also reaffirmed its commitment to selling the Family Dollar brand for $1 billion, with the transaction expected to close in the second quarter.
Market Reaction
The announcement led to notable movements among Dollar Tree and its competitors:
- Dollar Tree Inc. (NASDAQ: DLTR): $89.62, down $7.10 (7.34%)
- Dollar General Corp. (NYSE: DG): $110.96, down $1.61 (1.43%)
- Five Below Inc. (NASDAQ: FIVE): $121.93, down $0.28 (0.23%)
- Target Corp. (NYSE: TGT): $94.64, down $1.14 (1.19%)
Strategic Outlook
Analysts note that Dollar Tree’s shift away from its traditional $1 price point, initiated in 2021, is aiding in mitigating tariff-related pressures. By introducing higher-priced items, some up to $7.25, the company has gained flexibility in managing supply costs without uniformly increasing prices across all products.
This diversified pricing strategy positions Dollar Tree to better handle ongoing economic challenges, distinguishing it from competitors like Dollar General, which maintains a larger inventory of sub-$1 items. The company expects continued benefits from this approach throughout the year.
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