Dollar Tree reported a sharp jump in second-quarter profitability as sales rose and margins widened, helped by tariff refunds and stronger traffic trends.
Net sales in the quarter ended August 1 climbed 7.0% to $4.9 billion from a year earlier. Comparable store sales rose 3.7%, driven by a 3.3% increase in average ticket and a 0.4% increase in traffic.
Operating income surged 198.7% to $690 million, and operating margin expanded 900 basis points to 14.1%. Gross margin widened 850 basis points to 42.9%, while selling, general and administrative expenses fell to 29.2% of revenue from a year ago.
Diluted earnings per share jumped to $2.70 from the prior-year period, a 260.0% increase. The company said that figure included a $1.31 benefit tied to tariff refunds.
For the first half of the year, net sales increased 7.1% to $9.9 billion. Comparable store sales rose 3.6%, with a 3.9% gain in average ticket partly offset by a 0.3% decline in traffic.
Year-to-date operating income increased 89.1% to $1.16 billion, and operating margin expanded to 11.8% from a year ago. Gross profit rose 21.9% to $3.9 billion, with gross margin up 480 basis points to 39.8%.
For the first six months, diluted earnings per share from continuing operations reached $4.44, versus the prior-year period, and included a $1.29 net benefit from tariff refunds.
The company repurchased 5.6 million shares in the quarter for $605 million, bringing year-to-date repurchases to 11.1 million shares for $1.2 billion. At quarter-end, Dollar Tree had $1.1 billion in cash and cash equivalents and $2.5 billion remaining under its buyback authorization.
Store count ended the quarter at 9,436 locations. During the period, Dollar Tree opened 75 new stores and converted or added about 710 locations to its multi-price format, ending with about 6,600 multi-price stores.
For full-year fiscal 2026, Dollar Tree now expects net sales of $20.5 billion to $20.7 billion and adjusted diluted EPS of $7.70 to $8.05. For the third quarter, it projected comparable sales growth of 3.0% to 4.0% and adjusted EPS of $0.80 to $0.95. Following these announcements, the company's shares moved -1.55%, and are now trading at a price of $130.13. For the full picture, make sure to review DOLLAR TREE, INC.'s 8-K report.
