Dollar Tree Raises Fiscal 2026 EPS Outlook to $7.70-$8.05
Dollar Tree lifted its fiscal 2026 earnings forecast to a range of $7.70 to $8.05 per share, driven by strong comparable sales and tariff refunds.
Key points
- Dollar Tree raised fiscal 2026 adjusted EPS guidance to $7.70-$8.05, including a 60-cent tariff refund benefit.
- Second-quarter net sales rose 7% to $4.89 billion, with comparable-store sales up 3.7% and traffic up 0.4%.
- The company plans to reinvest $210 million in store operations, which is expected to reduce third-quarter EPS by 50 cents.
Dollar Tree, Inc. (DLTR) reported second-quarter net sales of $4.89 billion, a 7% year-over-year increase, while raising its full-year fiscal 2026 adjusted earnings guidance to between $7.70 and $8.05 per share. The retailer attributed the positive shift to improved store execution and the expansion of multi-price merchandise, which now accounts for 17% of total sales.
Despite the upward revision in earnings estimates, DLTR shares have declined 17.9% over the past four weeks. This price action reflects investor caution regarding the sustainability of margins, as a significant portion of the recent profit growth is tied to temporary tariff refunds rather than structural operational gains.
Sales growth driven by traffic
Comparable-store sales rose 3.7% in the second quarter, with average ticket increasing 3.3% and customer traffic improving 0.4%. This balanced growth indicates that demand is broadening beyond price increases. Consumables posted a 5.8% comparable sales gain, while discretionary items grew 1.6%, supporting overall basket size.
Tariff refunds boost quarterly earnings
Adjusted earnings per share reached $1.39, an 80.5% increase from the prior-year period. This figure excludes a $1.31 per-share benefit from net tariff refunds, which totaled $383 million. Excluding this one-time gain, underlying profitability still improved, but the refund remains a critical component of the current quarter's headline results.
Reinvestment pressures near-term margins
Management plans to reinvest approximately $210 million of the tariff refund proceeds into pricing, marketing, and store conditions. This spending is expected to create a 50-cent negative impact on third-quarter adjusted earnings, which are guided at 80 to 95 cents per share. Gross margin expanded 850 basis points to 42.9%, but roughly 680 basis points of that gain is attributable to the refund benefit.
Selling, general, and administrative expenses decreased 40 basis points to a 29.2% rate in the second quarter. However, first-half SG&A expenses edged up to 28.5% from 28.4% a year earlier due to higher marketing costs and depreciation. The company trades at 14.1 times forward 12-month earnings, a discount to the Zacks sub-industry average of 27.04 times, as noted in the TradingView report.
