Dollar Tree’s first quarter showed a clear step up from a year earlier, with net sales rising 7.2% to $5.0 billion and comparable store sales up 3.5%. The gain in comps came from a 4.5% increase in average ticket, which more than offset a 1.0% decline in traffic.
Operating income climbed 23.2% to $473.3 million, and the operating margin widened 120 basis points. Gross profit margin improved by the same 120-basis-point amount, helped by higher mark-on, lower freight costs and lower shrink, though those gains were partly offset by higher tariff costs and markdowns.
Earnings per share from continuing operations rose to $1.76 from the prior-year quarter, up 19.7%. On an adjusted basis, diluted EPS jumped 38.1% to $1.74, while adjusted operating income increased 22.0% to $473.3 million.
Selling, general and administrative expenses moved higher as well, rising 50 basis points to 27.8% of total revenue. The company said higher marketing costs, general liability costs and depreciation outweighed lower payroll expenses.
Dollar Tree generated $644 million in net cash from operating activities from continuing operations and $392 million in free cash flow during the quarter. It repurchased 5.5 million shares for $595 million, leaving $1.3 billion remaining under its authorization. Quarter-to-date in the second quarter, it has already bought back another $98 million of stock.
Store count also expanded. The company opened 113 new Dollar Tree stores in the quarter and converted or added about 630 stores to its multi-price format, ending the period with approximately 5,900 multi-price stores. Total store count at quarter-end was 9,382 across the Dollar Tree U.S. and Canada banners.
For fiscal 2026, Dollar Tree raised its adjusted EPS outlook to $6.70 to $7.10. It now expects full-year net sales of $20.5 billion to $20.7 billion, based on comparable store sales growth of 3% to 4%, and it is planning about 400 new store openings and 75 closings.
For the second quarter, the company expects net sales of $4.8 billion to $4.9 billion, with comparable store sales growth of 2.5% to 3.5%. Adjusted EPS for the quarter is projected to be $1.00 to $1.15. Following these announcements, the company's shares moved 17.74%, and are now trading at a price of $112.88. If you want to know more, read the company's complete 8-K report here.
