USA: Dollar Tree reports higher first-quarter sales, raises fiscal 2026 outlook

Discount Variety Retail Chain Dollar Tree reported stronger first-quarter earnings and sales growth Thursday, driven by higher customer spending and improved merchandise margins, as the discount retailer raised its outlook for fiscal 2026.

The company said net sales for the quarter ended May 2 rose 7.2% to $5 billion from a year earlier. Comparable-store sales increased 3.5%, fueled by a 4.5% increase in average ticket size, though customer traffic declined 1%.

Results reflect continuing operations, which include Dollar Tree stores in the United States and Canada following the sale of Family Dollar.

For the second quarter, the company expects net sales between $4.8 billion and $4.9 billion, with comparable-store sales growth between 2.5% and 3.5%. Adjusted diluted earnings per share are expected to range from $1 to $1.15.

Dollar Tree also raised its full-year forecast. The company now expects fiscal 2026 net sales from continuing operations between $20.5 billion and $20.7 billion, with comparable-store sales growth projected between 3% and 4%.

The retailer said it expects to open about 400 new stores and close approximately 75 locations during the fiscal year.

Gross profit margin expanded by 1.2 percentage points, helped by higher merchandise markups, lower freight costs and reduced inventory shrink. Those gains were partially offset by higher tariff-related costs and increased markdown activity.

Selling, general and administrative expenses rose to 27.8% of revenue from the prior year, primarily because of higher marketing expenses, liability costs and depreciation. Lower payroll expenses partially offset the increase.

Operating income climbed 23% to $473.3 million, while operating margin improved by 1.2 percentage points. Adjusted operating income also increased 22% to $473.3 million.

Dollar Tree reported income from continuing operations of $347.3 million, or $1.76 per diluted share. Adjusted earnings were $343.4 million, or $1.74 per diluted share.

The company repurchased 5.5 million shares during the quarter for $595 million. As of May 2, Dollar Tree had $1 billion in cash and cash equivalents and $1.3 billion remaining under its share repurchase authorization. The company reported no commercial paper borrowings or outstanding balance on its revolving credit facility.

Dollar Tree forecast adjusted diluted earnings per share for fiscal 2026 in a range of $6.70 to $7.10.

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