Dollar Tree's sales top forecasts as fewer people are shopping but they're spending more

By Tomi Kilgore

The stock is surging toward its best day in four years after the discount retailer's full-year profit outlook was raised

Dollar Tree's stock is soaring after earnings beat expectations and the full-year profit outlook was raised.

Shares of Dollar Tree saw a nice pop in early Thursday trading, heading toward their best day in years, after the discount retailer beat quarterly profit expectations and raised its full-year outlook, saying lower transport costs helped offset tariff costs and increased markdowns.

And while traffic to the company's (DLTR) stores was down 1% from a year earlier, the price markdowns helped drive a 4.5% increase in how much the average shopper spent. Lower traffic but a higher average ticket is a pattern that has continued for three quarters, as people feeling the pinch of stubbornly elevated U.S. inflation shop for bargains.

CEO Mike Creedon said on the post-earnings call with analysts that customers, especially those from lower income households who are being hurt by higher gasoline prices, are looking to stretch their budgets by buying smaller and more affordable pack sizes. But he noted that "customers across multiple income cohorts" are now focusing more on value.

"Customers are shopping thoughtfully and closer to need, with a continued focus on affordability, convenience and trip efficiency," Creedon said, according to a FactSet transcript.

Still, for the first quarter of the Dollar Tree fiscal year, ending May 2, the 3.5% rise in comparable net sales, or sales in stores open at least 15 months, topped the average analyst estimate compiled by FactSet of 3.3%, marking the seventh straight beat on that metric.

Separately, the company also announced a new partnership with delivery platform DoorDash (DASH), to provide on-demand delivery services of merchandise from every Dollar Tree store.

The stock shot up 16.9% in recent morning trading, enough to pace the S&P 500 index's SPX gainers. It was also on track for its biggest one-day gain since the 21.9% jump on May 26, 2022.

The rally was also providing a 5.6% lift to shares of rival Dollar General (DG), which reports earnings on June 2.

Adjusted earnings per share for the quarter climbed 38.1% to $1.74 and beat the FactSet consensus of $1.53. The results were boosted by a 1.2-percentage-point increase in gross margin - a measure of sales profitability.

Total revenue grew 7.2% to $4.98 billion, just above the FactSet consensus of $4.96 billion.

The company expects adjusted EPS for the current quarter of $1 to $1.15, which is above current analyst expectations of 99 cents a share. For the full year, the company raised its adjusted EPS guidance range to $6.70 to $7.10 from $6.50 to $6.90.

The company continues to expect to open 400 new stores this year and to close 75 stores.

"A clearly good quarter," wrote Jefferies analyst Corey Tarlowe in a note to clients. "Dollar Tree delivered a clean beat, with broad-based sales strength."

Dollar Tree wasn't the only retailer seeing a big gain in its stock after earnings. Shares of discount department-store chain Kohl's (KSS) ran up 16.7% in morning trading Thursday and consumer electronics and appliance retailer Best Buy's stock (BBY) climbed 13.6%, after both companies beat profit, net sales and comparable sales expectations.

Dollar Tree's stock has dropped 22.1% in 2026 through Wednesday, while shares of rival Dollar General have shed 21.4%. In comparison, the State Street Consumer Staples Select Sector SPDR ETF XLP has gained 8.9% this year and the S&P 500 index SPX has advanced 9.9%.

-Tomi Kilgore

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05-28-26 1033ET