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DLTR Q1 Earnings Beat Estimates on Margin Gains and Higher Comps
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Key Takeaways
DLTR Q1 adjusted EPS rose 38% to $1.74, topping estimates as sales climbed 7.2%.
Dollar Tree expanded gross margin by 120 bps on higher markups, lower freight costs and less shrinkage.
DLTR raised FY26 adjusted EPS outlook to $6.70-$7.10 and plans 400 store openings.
Dollar Tree, Inc. (DLTR - Free Report) posted solid first-quarter fiscal 2026 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. Both metrics increased year over year. Quarterly results benefited from stronger comparable-store sales and improved margins, supported by better product markups, lower freight costs and reduced shrinkage.
Dollar Tree’s adjusted earnings per share (EPS) from continuing operations jumped 38% year over year to $1.74 and beat the Zacks Consensus Estimate of $1.53.
Dollar Tree, Inc. Price, Consensus and EPS Surprise
Shares of Dollar Tree climbed more than 15% in the pre-market session following stronger-than-expected first-quarter results and upbeat investor sentiment around margin improvement and comparable-store sales growth. Shares of this Zacks Rank #3 (Hold) company have gained 5.9% in the past year compared with the industry’s 12.6% growth.
Net sales increased 7.2% year over year to $4.97 billion and surpassed the Zacks Consensus Estimate of $4.96 billion. Same-store sales (comps) grew 3.5% year over year. The company’s comps benefited from a 4.5% increase in the average ticket, partly offset by 1% lower traffic.
Profitability improved meaningfully as gross profit margin expanded 120 basis points (bps) year over year. Management attributed the increase primarily to higher mark-on, lower freight costs and lower shrink, which more than offset higher tariff costs and higher markdowns. We estimated a year-over-year increase of 6.5% in gross profit and a 20-bps contraction in the gross margin.
Selling, general and administrative (SG&A) costs were 27.8% of sales, up 50 bps from the year-earlier quarter. The increase was mainly reflecting higher marketing and general liability spending as well as greater depreciation, partly offset by lower payroll costs. On an adjusted basis, SG&A, including net transition services agreement income, increased 10 basis points as a share of total revenue.
Adjusted operating income jumped 22% year over year to $473.3 million. The operating margin rose 110 basis points to 9.5%.
DLTR’s Financial Health
Dollar Tree ended the fiscal first quarter with cash and cash equivalents of $1 billion, no borrowings under its credit facilities and no commercial paper outstanding. It had a net long-term debt, excluding the current portion, of $2.93 billion and shareholders’ equity of $3.5 billion as of May 2, 2026.
In first-quarter fiscal 2026, the company repurchased 5.5 million shares for $595 million. Dollar Tree had $1.3 billion remaining under repurchase authorization as of May 2, 2026.
Dollar Tree’s Store Update
In the fiscal first quarter, the company opened 113 Dollar Tree stores and converted or added nearly 630 stores to the Dollar Tree 3.0 multi-price format, ending the year with approximately 5,900 multi-price stores. As of May 2, 2026, DLTR operated 9,382 stores.
Q2 & FY26 Guidance by DLTR
The company projects net sales from continuing operations of $20.5-$20.7 billion, supported by comps growth of 3-4% compared with 4-6% mentioned earlier. Adjusted EPS from continuing operations is projected to be $6.70-$7.10, up from previous guidance of $6.50-$6.90. It projects approximately 400 store openings and 75 closings for the fiscal year. DLTR reported revenues of $19.4 billion and adjusted EPS of $5.75 in fiscal 2025.
For the second quarter of fiscal 2026, the company projects net sales from continuing operations between $4.8 billion and $4.9 billion, supported by expected comparable-store sales growth of 2.5-3.5%. Adjusted EPS is anticipated to come within the $1.00-$1.15 range.
Key Picks
Some better-ranked stocks in the retail space are Tapestry, Inc. (TPR - Free Report) , Victoria's Secret & Co. (VSCO - Free Report) and Levi Strauss & Co. (LEVI - Free Report) .
The Zacks Consensus Estimate for Tapestry’s current fiscal-year earnings and sales indicates growth of 34.71% and 13.2%, respectively, from the year-ago actuals. TPR delivered a trailing four-quarter average earnings surprise of 15.6%.
Victoria's Secret is a specialty retailer of women's intimates, sleepwear, apparel, sport and swimwear, and prestige fragrances and body care. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Victoria's Secret’s current fiscal-year sales and earnings indicates growth of 6.2% and 16.3%, respectively, from the year-ago reported numbers. VSCO delivered a trailing four-quarter earnings surprise of 55.1%, on average.
Levi Strauss designs and markets jeans, casual wear and related accessories for men, women and children. It currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for Levi Strauss’ current fiscal-year earnings and sales suggests growth of 11.9% and 5.2%, respectively, from the year-ago actuals. LEVI delivered a trailing four-quarter average earnings surprise of 21.4%.
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DLTR Q1 Earnings Beat Estimates on Margin Gains and Higher Comps
Key Takeaways
Dollar Tree, Inc. (DLTR - Free Report) posted solid first-quarter fiscal 2026 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. Both metrics increased year over year. Quarterly results benefited from stronger comparable-store sales and improved margins, supported by better product markups, lower freight costs and reduced shrinkage.
Dollar Tree’s adjusted earnings per share (EPS) from continuing operations jumped 38% year over year to $1.74 and beat the Zacks Consensus Estimate of $1.53.
Dollar Tree, Inc. Price, Consensus and EPS Surprise
Dollar Tree, Inc. price-consensus-eps-surprise-chart | Dollar Tree, Inc. Quote
Shares of Dollar Tree climbed more than 15% in the pre-market session following stronger-than-expected first-quarter results and upbeat investor sentiment around margin improvement and comparable-store sales growth. Shares of this Zacks Rank #3 (Hold) company have gained 5.9% in the past year compared with the industry’s 12.6% growth.
DLTR Stock's Price Performance
Image Source: Zacks Investment Research
DLTR’s Quarterly Performance: Key Metrics & Insights
Net sales increased 7.2% year over year to $4.97 billion and surpassed the Zacks Consensus Estimate of $4.96 billion. Same-store sales (comps) grew 3.5% year over year. The company’s comps benefited from a 4.5% increase in the average ticket, partly offset by 1% lower traffic.
Profitability improved meaningfully as gross profit margin expanded 120 basis points (bps) year over year. Management attributed the increase primarily to higher mark-on, lower freight costs and lower shrink, which more than offset higher tariff costs and higher markdowns. We estimated a year-over-year increase of 6.5% in gross profit and a 20-bps contraction in the gross margin.
Selling, general and administrative (SG&A) costs were 27.8% of sales, up 50 bps from the year-earlier quarter. The increase was mainly reflecting higher marketing and general liability spending as well as greater depreciation, partly offset by lower payroll costs. On an adjusted basis, SG&A, including net transition services agreement income, increased 10 basis points as a share of total revenue.
Adjusted operating income jumped 22% year over year to $473.3 million. The operating margin rose 110 basis points to 9.5%.
DLTR’s Financial Health
Dollar Tree ended the fiscal first quarter with cash and cash equivalents of $1 billion, no borrowings under its credit facilities and no commercial paper outstanding. It had a net long-term debt, excluding the current portion, of $2.93 billion and shareholders’ equity of $3.5 billion as of May 2, 2026.
In first-quarter fiscal 2026, the company repurchased 5.5 million shares for $595 million. Dollar Tree had $1.3 billion remaining under repurchase authorization as of May 2, 2026.
Dollar Tree’s Store Update
In the fiscal first quarter, the company opened 113 Dollar Tree stores and converted or added nearly 630 stores to the Dollar Tree 3.0 multi-price format, ending the year with approximately 5,900 multi-price stores. As of May 2, 2026, DLTR operated 9,382 stores.
Q2 & FY26 Guidance by DLTR
The company projects net sales from continuing operations of $20.5-$20.7 billion, supported by comps growth of 3-4% compared with 4-6% mentioned earlier. Adjusted EPS from continuing operations is projected to be $6.70-$7.10, up from previous guidance of $6.50-$6.90. It projects approximately 400 store openings and 75 closings for the fiscal year. DLTR reported revenues of $19.4 billion and adjusted EPS of $5.75 in fiscal 2025.
For the second quarter of fiscal 2026, the company projects net sales from continuing operations between $4.8 billion and $4.9 billion, supported by expected comparable-store sales growth of 2.5-3.5%. Adjusted EPS is anticipated to come within the $1.00-$1.15 range.
Key Picks
Some better-ranked stocks in the retail space are Tapestry, Inc. (TPR - Free Report) , Victoria's Secret & Co. (VSCO - Free Report) and Levi Strauss & Co. (LEVI - Free Report) .
Tapestry is the designer and marketer of fine accessories and gifts for women and men in the United States and internationally. It carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Tapestry’s current fiscal-year earnings and sales indicates growth of 34.71% and 13.2%, respectively, from the year-ago actuals. TPR delivered a trailing four-quarter average earnings surprise of 15.6%.
Victoria's Secret is a specialty retailer of women's intimates, sleepwear, apparel, sport and swimwear, and prestige fragrances and body care. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Victoria's Secret’s current fiscal-year sales and earnings indicates growth of 6.2% and 16.3%, respectively, from the year-ago reported numbers. VSCO delivered a trailing four-quarter earnings surprise of 55.1%, on average.
Levi Strauss designs and markets jeans, casual wear and related accessories for men, women and children. It currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for Levi Strauss’ current fiscal-year earnings and sales suggests growth of 11.9% and 5.2%, respectively, from the year-ago actuals. LEVI delivered a trailing four-quarter average earnings surprise of 21.4%.