Dollar Tree Raises Annual Profit Outlook Amid Sales Deceleration
The discount retailer reported first-quarter net sales of $5.0 billion.
Dollar Tree (DLTR) reported first-quarter net sales of $5.0 billion.
The discount retailer saw a deceleration in its top-line growth as comparable store sales slowed, though the company raised its full-year profit expectations and expanded its multi-price store footprint.
Net sales grew 7.2% year over year, a decline from the 9.0% growth reported in the prior quarter. Comparable store net sales growth slowed to 3.5% from 5.0% in the fourth quarter of fiscal 2025.
The slowdown in comparable sales followed a decrease in average ticket growth, which fell to 4.5% from 6.3% in the previous quarter. Store traffic continued to decline, falling 1.0% in the first quarter compared to a 1.2% decline in the prior period.
Profitability metrics improved despite the sales trend. Gross profit margin expanded 120 basis points, following a 150 basis point expansion in the fourth quarter. Operating income margin also expanded 120 basis points compared to the first quarter of fiscal 2025.
Dollar Tree increased the number of multi-price stores to approximately 5,900 by the end of the quarter, up from approximately 5,300 at the end of fiscal 2025.
The company raised its fiscal 2026 adjusted earnings per share outlook from continuing operations to $6.70 - $7.10, up from the March guidance of $6.50 - $6.90. However, the outlook for the second quarter is lower, with adjusted EPS expected between $1.00 and $1.15, compared to the first-quarter range of $1.45 to $1.60.
Comparable store net sales growth for the second quarter is projected at 2.5% to 3.5%, down from the first-quarter outlook of 3% to 4%.
Dollar Tree spent $595 million on share repurchases during the first quarter, an increase from $232 million in the fourth quarter.