TLDR
- Dollar Tree beat Q1 earnings expectations with $1.26 per share versus $1.21 expected
- Stock fell 1.8% in premarket trading despite the earnings beat
- Company forecasts Q2 profit could drop 45-50% year-over-year due to tariff uncertainty
- Annual profit forecast raised to $5.15-$5.65 per share from previous $5.00-$5.50 range
- Family Dollar sale expected to hurt full-year earnings by 30-35 cents per share
Dollar Tree stock dropped in premarket trading Wednesday despite reporting first-quarter results that beat Wall Street expectations. The discount retailer posted adjusted earnings of $1.26 per share on revenue of $4.64 billion.
Dollar Tree, Inc., $DLTR, Q1-FY25. Results:
🔴 -6% Pre-Market📊 Adj. EPS: $1.26 🟢
💰 Revenue: $4.6B 🟢
📈 Net Income: $313.5M
🔎 Dollar Tree opened 148 new stores and converted 500 locations to its multi-price format as it prepares to complete the Family Dollar sale in Q2. pic.twitter.com/ZDyzxVz7g8— EarningsTime (@Earnings_Time) June 4, 2025
Analysts had expected earnings of $1.21 per share on sales of $4.54 billion according to FactSet data. The revenue figure represented a solid beat for the quarter.
Shares fell 1.8% to $95 in premarket trading. The stock has gained 29% year-to-date coming into Wednesday’s session.
CEO Mike Creedon struck an optimistic tone about the company’s ability to weather economic challenges. “History has shown that we have the resilience to emerge stronger from periods of economic uncertainty and in today’s rapidly evolving environment,” he said.
The stock decline came as investors focused on the company’s weak second-quarter outlook. Dollar Tree warned that Q2 adjusted profit from continuing operations could fall 45% to 50% compared to the same period last year.
The company blamed tariff uncertainty for the projected profit decline. Trump administration tariff policies have created volatility for retailers who import goods from overseas.
Businesses across multiple sectors have faced challenges planning inventory and pricing strategies. Consumer goods companies have been particularly affected by the changing trade environment.
Tariff Impact and Business Changes
Dollar Tree expects the profit pressure to ease in the second half of the year. The company projects earnings will re-accelerate after the challenging second quarter.
The retailer maintained its annual comparable store sales forecast. This came one day after competitor Dollar General raised its full-year targets following strong quarterly results.
Despite the near-term headwinds, Dollar Tree raised its annual profit forecast. The company now expects fiscal 2025 adjusted earnings per share between $5.15 and $5.65.
The previous forecast ranged from $5.00 to $5.50 per share. Management cited lower freight costs and continued demand for affordable essentials as reasons for the increase.
The Family Dollar business sale continues to impact financial projections. Dollar Tree announced in March it would sell the less-profitable banner for $1 billion to private equity investors.
Family Dollar Sale Effects
The company reiterated that the Family Dollar sale will reduce full-year earnings per share by 30 to 35 cents. This impact will be concentrated in the first two quarters of fiscal 2025.
Dollar Tree’s core business has shown resilience during economic uncertainty. Consumers continue seeking value and affordable essential items at the retailer’s stores.
The company operates both Dollar Tree and Family Dollar store formats. The Dollar Tree banner maintains its everything-for-$1.25 pricing strategy across most merchandise.
Revenue growth came from both comparable store sales increases and new store openings. The company continues expanding its footprint in key markets across the United States.
Management emphasized the company’s track record of navigating challenging periods. The retailer has historically performed well during economic downturns when consumers trade down to value options.
Lower freight costs have helped offset some operational pressures. Transportation and logistics expenses had risen sharply in recent years but have begun moderating.
The company’s second-quarter profit warning reflects caution about tariff-related cost increases. Management expects these pressures to be temporary rather than permanent structural changes.
Dollar Tree reported first-quarter revenue of $4.64 billion compared to analyst estimates of $4.54 billion, with adjusted profit of $1.26 per share topping estimates of $1.20.
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