Dollar Tree(DLTR) - 2026 Q2 - Quarterly Results

Executive Summary & Highlights Dollar Tree reported strong Q2 sales and margin growth, completed the Family Dollar divestiture, and raised its full-year outlook, focusing on the Dollar Tree brand CEO Statement CEO Mike Creedon emphasized strong Q2 performance and the company's renewed focus on strengthening the Dollar Tree brand post-Family Dollar sale - Dollar Tree delivered strong sales growth, margin outperformance, and market share gains in Q2 Fiscal 2025[3] - Following the Family Dollar sale, Dollar Tree is now a fully focused business, directing all resources towards strengthening the Dollar Tree brand[3] Business Highlights Q2 Fiscal 2025 saw Dollar Tree same-store sales up 6.5%, diluted EPS of $0.75, over $1 billion in share repurchases, and an increased full-year net sales outlook Q2 Fiscal 2025 Business Highlights | Metric | Value | | :----------------------------------- | :----------------------------------- | | Dollar Tree Same-Store Net Sales (%) | +6.5% (Traffic +3.0%, Ticket +3.4%) | | Diluted EPS (Continuing Operations, $) | $0.75 | | Adjusted Diluted EPS (Continuing Operations, $) | $0.77 (includes $0.20 tariff timing impact) | | Share Repurchases (YTD, $B) | Over $1 Billion | | Full-Year FY25 Net Sales Outlook ($B) | $19.3 - $19.5 Billion | | Comparable Store Net Sales Growth Outlook (%) | 4% - 6% | | Adjusted EPS Outlook (Continuing Operations, $) | $5.32 - $5.72 | | New Dollar Tree Stores Opened (Count) | 106 | | Stores Converted to 3.0 Multi-Price Format (Count) | 585 | | Net Cash Provided by Operating Activities (YTD, $M) | $639 Million | | Free Cash Flow (YTD, $M) | $145 Million | Financial Performance The company reported strong Q2 financial results with increased net sales and gross margin, alongside significant capital allocation activities and year-to-date performance Second Quarter Fiscal 2025 Results Q2 Fiscal 2025 saw net sales rise 12.3% to $4.6 billion, Dollar Tree same-store sales up 6.5%, and diluted EPS of $0.75, driven by margin expansion Q2 Fiscal 2025 Key Operating Results (Unaudited) | Metric | Q2 Fiscal 2025 | Change (YoY, %) | | :----------------------------------- | :------------- | :----------- | | Net Sales ($B) | $4.6B | 12.3% | | Same-Store Net Sales Growth – Dollar Tree (%) | 6.5% | | | Operating Income ($M) | $231M | 7.0% | | Diluted EPS ($) | $0.75 | 13.6% | | Adjusted Operating Income ($M) | $236M | 7.4% | | Adjusted Diluted EPS ($) | $0.77 | 13.2% | - Gross profit increased 12.9% to $1.6 billion, and gross margin expanded 20 basis points to 34.4%, primarily due to improved mark-on from pricing, lower domestic freight, and sales leverage, partially offset by higher tariff costs and shrink[10] - Selling, general and administrative expenses increased 60 basis points to 29.6% of total revenue, driven by higher store payroll, depreciation, and incentive compensation, partially offset by lower general liability and stock compensation[11] - Diluted EPS from continuing operations was $0.75, with an adjusted diluted EPS of $0.77, which included approximately $0.20 of positive impact from the timing of inventory mark-on and tariffs[14] Capital Allocation & Liquidity (Q2) Q2 capital allocation included repurchasing 5.0 million shares for $501.4 million, replenishing a $2.5 billion share repurchase authorization, and redeeming $1.0 billion in senior notes - The Company repurchased 5.0 million shares for $501.4 million in Q2, and an additional 0.6 million shares for $71 million subsequent to quarter end[15] - The Board of Directors replenished the share repurchase authorization to an aggregate amount of $2.5 billion[15] - Redeemed $1.0 billion of 4.00% Senior Notes on May 15, 2025[16] Liquidity Position as of August 2, 2025 | Metric | Amount | | :----------------------------------- | :------------- | | Remaining Share Repurchase Authorization ($B) | $2.4 Billion | | Cash and Cash Equivalents ($M) | $666.3 Million | | Commercial Paper Notes Outstanding ($M) | $300 Million | | Revolver Borrowings ($) | $0 | Year-to-Date Fiscal 2025 Results Year-to-date Fiscal 2025 net sales grew 11.8% to $9.2 billion, with Dollar Tree same-store sales up 5.9%, and diluted EPS from continuing operations at $2.22 Year-to-Date Fiscal 2025 Key Operating Results (Unaudited) | Metric | YTD Fiscal 2025 | Change (YoY, %) | | :----------------------------------- | :-------------- | :----------- | | Net Sales ($B) | $9.2 Billion | 11.8% | | Dollar Tree Same-Store Sales (%) | 5.9% | | | Gross Profit ($B) | $3.2 Billion | 12.3% | | Gross Margin (%) | 35.0% | +20 bps | | Operating Income ($M) | $615.1 Million | 2.9% | | Operating Income Margin (%) | 6.7% | -60 bps | | Diluted EPS (Continuing Operations, $) | $2.22 | | | Adjusted Diluted EPS (Continuing Operations, $) | $2.03 | | | Share Repurchases (YTD, Shares & $M) | 11.0 Million shares for $938.2 Million | | Strategic Developments Dollar Tree completed the divestiture of its Family Dollar business, generating $800 million in cash and realizing significant tax benefits Family Dollar Divestiture The Family Dollar divestiture was completed on July 5, 2025, for $1.0 billion, generating approximately $800 million in total cash and $425 million in tax benefits - Completed the sale of Family Dollar business on July 5, 2025, for a purchase consideration of $1.0 billion[21] Family Dollar Sale Proceeds | Item | Amount | | :----------------------------------- | :------------- | | Net proceeds paid at closing ($M) | $665 Million | | Proceeds to be received within 90 days ($M) | $22 Million | | Cash monetized prior to closing ($M) | $113 Million | | Total Cash Monetized ($M) | **$800 Million** | | Expected Tax Benefits from Losses ($M) | ~$425 Million | - Family Dollar results are now presented as discontinued operations in financial statements, and the company has transition services agreements in place for up to 18 months[22][23] Financial Outlook The company increased its full-year fiscal 2025 net sales outlook to $19.3-$19.5 billion and provided adjusted diluted EPS guidance, while anticipating a Q2 tariff timing reversal in Q3 Full-Year Fiscal 2025 Outlook Full-year fiscal 2025 net sales outlook for continuing operations increased to $19.3-$19.5 billion, with adjusted diluted EPS projected between $5.32 and $5.72 - Full-year fiscal 2025 outlook is presented on a continuing operations basis, reflecting the Dollar Tree segment[24] - Outlook assumes current tariff levels remain in effect and the company can mitigate most incremental margin pressure from higher tariffs and other input costs[25] Full-Year Fiscal 2025 Outlook (Continuing Operations) | Metric | Range | | :----------------------------------- | :----------------------------------- | | Net Sales ($B) | $19.3 Billion to $19.5 Billion | | Comparable Store Net Sales Growth (%) | 4% to 6% | | Adjusted Diluted EPS ($) | $5.32 to $5.72 | Third Quarter Fiscal 2025 Outlook The $0.20 positive timing impact on Q2 adjusted diluted EPS is expected to reverse in Q3 Fiscal 2025, leading to similar Q3 adjusted diluted EPS compared to prior year - The positive timing impact of approximately $0.20 on adjusted diluted EPS from continuing operations is expected to reverse in Q3 Fiscal 2025[27] - Third quarter 2025 adjusted diluted EPS is expected to be similar to Q3 Fiscal 2024[27] Corporate Information & Disclosures This section provides details on investor relations, company overview, non-GAAP financial measures, forward-looking statements, and contact information Investor Relations A conference call was held on September 3, 2025, to discuss earnings, with supplemental financial information available on the Investor Relations website - A conference call was held on September 3, 2025, to discuss earnings results, with a recorded version available for seven days[28] - Supplemental financial information for the second quarter is available on the Investor Relations portion of the Company's website[29] About Dollar Tree, Inc. Dollar Tree, Inc. is a leading North American value retailer operating over 9,000 stores across the U.S. and Canada under its namesake brands - Dollar Tree, Inc. is one of North America's largest value retailers, operating over 9,000 stores and 18 distribution centers across 48 U.S. states and five Canadian provinces[30] - The company operates under the Dollar Tree and Dollar Tree Canada brands, employing approximately 150,000 associates[30] Non-GAAP Financial Measures The company uses non-GAAP financial measures like adjusted SG&A and diluted EPS to provide additional insight into operating performance and liquidity, reconciled to GAAP - Dollar Tree uses non-GAAP financial measures such as adjusted SG&A, adjusted operating income, adjusted income from continuing operations, adjusted diluted EPS, adjusted effective tax rate, and free cash flow[31] - These non-GAAP measures are intended to provide additional information for evaluating current operating results in relation to past periods and are reconciled to GAAP in the financial tables[32] Forward-Looking Statements The press release includes forward-looking statements on fiscal 2025 outlook, tariffs, and the Family Dollar sale, which are subject to risks and uncertainties - The press release includes forward-looking statements concerning fiscal 2025 business and financial outlook, tariff impacts, business initiatives, and the Family Dollar sale[33] - These statements are subject to risks and uncertainties, and the company is not obligated to publicly revise them[33] Contact Information Investor Relations inquiries can be directed to Robert A. LaFleur, Senior Vice President, at 757-991-5645 or via the company website - Contact for Investor Relations: Robert A. LaFleur, Senior Vice President, Investor Relations, at 757-991-5645[34] Financial Tables This section provides detailed financial statements, including income statements, balance sheets, cash flows, segment information, and non-GAAP reconciliations Table of Contents for Financial Tables This section outlines the detailed financial statements and reconciliations, including income statements, balance sheets, cash flows, and non-GAAP measures - The financial tables include Condensed Consolidated Income Statements, Balance Sheets, Statements of Cash Flows, Segment Information, and Reconciliations of Non-GAAP Financial Measures[36] Condensed Consolidated Income Statements The income statements detail financial performance for the 13 and 26 weeks ended August 2, 2025, with Family Dollar as discontinued operations Condensed Consolidated Income Statements (Continuing Operations) | Metric | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :----------------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Net sales ($M) | $4,566.8M | $4,065.5M | $9,203.3M | $8,231.1M | | Total revenue ($M) | $4,570.4M | $4,068.6M | $9,210.1M | $8,237.5M | | Cost of sales ($M) | $2,996.7M | $2,674.2M | $5,983.7M | $5,363.3M | | Selling, general and administrative expenses ($M) | $1,350.7M | $1,178.6M | $2,619.3M | $2,276.5M | | Operating income ($M) | $231.0M | $215.8M | $615.1M | $597.7M | | Income from continuing operations ($M) | $155.5M | $142.3M | $469.0M | $410.0M | | Net income ($M) | $188.4M | $132.4M | $531.8M | $432.5M | | Diluted EPS from continuing operations ($) | $0.75 | $0.66 | $2.22 | $1.89 | | Operating income margin (%) | 5.1% | 5.3% | 6.7% | 7.3% | | Effective tax rate (%) | 25.5% | 23.5% | 25.8% | 24.2% | Condensed Consolidated Balance Sheets The balance sheets present financial position as of August 2, 2025, showing a decrease in total assets primarily due to the Family Dollar divestiture Condensed Consolidated Balance Sheets (Selected Items) | Metric | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :----------------------------------- | :------------- | :--------------- | :------------- | | Cash and cash equivalents ($M) | $666.3M | $1,256.5M | $380.2M | | Merchandise inventories ($M) | $2,683.4M | $2,672.0M | $2,571.4M | | Total current assets ($M) | $3,613.9M | $9,107.2M | $6,092.3M | | Property, plant and equipment, net ($M) | $4,652.4M | $4,499.3M | $4,167.3M | | Total assets ($M) | $13,384.9M | $18,644.0M | $22,616.6M | | Short-term borrowings ($M) | $299.5M | $0M | $249.8M | | Current portion of long-term debt ($M) | $0M | $1,000.0M | $1,000.0M | | Total current liabilities ($M) | $3,486.9M | $8,585.9M | $5,999.9M | | Long-term debt, net ($M) | $2,429.7M | $2,431.2M | $2,428.7M | | Total liabilities ($M) | $9,779.8M | $14,666.6M | $15,237.1M | | Shareholders' equity ($M) | $3,605.1M | $3,977.4M | $7,379.5M | Condensed Consolidated Statements of Cash Flows Cash flow statements detail movements for the 26 weeks ended August 2, 2025, showing $639.2 million from operating activities and significant impacts from the Family Dollar sale Condensed Consolidated Statements of Cash Flows (Selected Items) | Metric | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :----------------------------------- | :------------------------- | :------------------------- | | Net income ($M) | $531.8M | $432.5M | | Income from continuing operations ($M) | $469.0M | $410.0M | | Net cash provided by operating activities of continuing operations (GAAP, $M) | $639.2M | $737.7M | | Net cash used in investing activities of continuing operations ($M) | $(21.2)M | $(638.9)M | | Net cash used in financing activities ($M) | $(1,636.0)M | $(164.9)M | | Net cash provided by (used in) discontinued operations ($M) | $263.5M | $(46.2)M | | Net change in cash, cash equivalents and restricted cash ($M) | $(753.9)M | $(112.8)M | | Cash, cash equivalents and restricted cash at end of period ($M) | $757.3M | $644.4M | Segment Information This table breaks down net sales, gross profit, and operating income for the Dollar Tree segment and Corporate for 13 and 26 weeks Segment Information (13 Weeks Ended Aug 2, 2025) | Metric | Dollar Tree | Corporate, support and other | Total | | :----------------------------------- | :---------- | :--------------------------- | :------ | | Net Sales ($M) | $4,566.8M | — | $4,566.8M | | Total Revenue ($M) | $4,566.8M | $3.6M | $4,570.4M | | Gross Profit ($M) | $1,570.1M | — | $1,570.1M | | Gross Profit Margin (%) | 34.4% | — | 34.4% | | SG&A Expenses ($M) | $1,203.1M | $147.6M | $1,350.7M | | SG&A Expense Rate (%) | 26.3% | 3.2% | 29.6% | | Operating Income (Loss, $M) | $367.0M | $(136.0)M | $231.0M | | Operating Income Margin (%) | 8.0% | 3.0% | 5.1% | Segment Information (26 Weeks Ended Aug 2, 2025) | Metric | Dollar Tree | Corporate, support and other | Total | | :----------------------------------- | :---------- | :--------------------------- | :------ | | Net Sales ($M) | $9,203.3M | — | $9,203.3M | | Total Revenue ($M) | $9,203.3M | $6.8M | $9,210.1M | | Gross Profit ($M) | $3,219.6M | — | $3,219.6M | | Gross Profit Margin (%) | 35.0% | — | 35.0% | | SG&A Expenses ($M) | $2,329.9M | $289.4M | $2,619.3M | | SG&A Expense Rate (%) | 25.3% | 3.1% | 28.4% | | Operating Income (Loss, $M) | $889.7M | $(274.6)M | $615.1M | | Operating Income Margin (%) | 9.7% | 3.0% | 6.7% | Dollar Tree Segment Information This section details Dollar Tree segment operational metrics, including store count, selling square footage, and sales per square foot as of August 2, 2025 Dollar Tree Segment Store Count & Square Footage | Metric | 13 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 2, 2025 | | :----------------------------------- | :------------------------- | :------------------------- | | Beginning Store Count (Stores) | 9,016 | 8,881 | | New stores (Count) | 106 | 254 | | Stores converted from Family Dollar (Count) | 36 | 41 | | Closings (Count) | (10) | (28) | | Ending Store Count (Stores) | 9,148 | 9,148 | | Selling Square Footage (Millions sq ft) | 81.2 | 81.2 | | Growth Rate (Square Footage, %) | 8.0% | 8.0% | | Sales per Square Foot (52 Weeks Ended Aug 2, 2025, $) | | $237 | Reconciliation of Non-GAAP Financial Measures (Explanation) This section explains the company's non-GAAP financial measures, their purpose, and the rationale for not providing forward-looking reconciliations - Non-GAAP measures are used to supplement GAAP reporting, excluding unusual expenses like strategic review costs, store closure costs, and severance, to provide a clearer view of operating performance[56] - Free cash flow is calculated as net cash provided by operating activities less capital expenditures, serving as an important indicator of liquidity[57] - A forward-looking reconciliation of projected adjusted diluted EPS to GAAP is not provided due to the inherent difficulty in predicting the occurrence and financial impact of non-GAAP adjustments[58] Reconciliation of Non-GAAP Financial Measures (Detailed) This detailed reconciliation adjusts GAAP figures for strategic review costs and other items to derive non-GAAP metrics for SG&A, operating income, and EPS Adjusted SG&A and Operating Income - Dollar Tree Segment (13 Weeks Ended Aug 2, 2025) | Metric | GAAP | Adjustments | Non-GAAP | | :----------------------------------- | :------- | :---------- | :------- | | SG&A expenses ($M) | $1,203.1M | $(0.7)M (Strategic review costs) | $1,202.4M | | SG&A expense rate (%) | 26.3% | | 26.3% | | Operating income ($M) | $367.0M | $0.7M (Strategic review costs) | $367.7M | | Operating income margin (%) | 8.0% | | 8.1% | Adjusted Operating Income, Income, EPS, and Tax Rate - Continuing Operations (13 Weeks Ended Aug 2, 2025) | Metric | GAAP | Adjustments | Non-GAAP | | :----------------------------------- | :------- | :---------- | :------- | | Operating income ($M) | $231.0M | $5.0M (Strategic review costs) | $236.0M | | Operating income margin (%) | 5.1% | | 5.2% | | Income from Continuing Operations ($M) | $155.5M | $5.0M (Strategic review costs), $(1.3)M (Tax impact) | $159.2M | | Diluted EPS from Continuing Operations ($) | $0.75 | $0.02 (Strategic review costs), $(0.01) (Tax impact) | $0.77 | | Effective tax rate (%) | 25.5% | — | 25.5% | Adjusted Operating Income, Income, EPS, and Tax Rate - Continuing Operations (26 Weeks Ended Aug 2, 2025) | Metric | GAAP | Adjustments | Non-GAAP | | :----------------------------------- | :------- | :---------- | :------- | | Operating income ($M) | $615.1M | $8.7M (Strategic review costs) | $623.8M | | Operating income margin (%) | 6.7% | | 6.8% | | Income from Continuing Operations ($M) | $469.0M | $8.7M (Strategic review costs), $(61.8)M (Insurance gain), $13.0M (Tax impact) | $428.9M | | Diluted EPS from Continuing Operations ($) | $2.22 | $0.04 (Strategic review costs), $(0.29) (Insurance gain), $0.06 (Tax impact) | $2.03 | | Effective tax rate (%) | 25.8% | 0.1% (Tax impact of non-GAAP adjustments) | 25.9% | Reconciliation of Free Cash Flow This reconciliation details free cash flow from continuing operations, calculated by subtracting capital expenditures from operating cash flow, totaling $145.3 million year-to-date Reconciliation of Free Cash Flow from Continuing Operations | Metric | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :----------------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Net cash provided by operating activities of continuing operations (GAAP, $M) | $260.7M | $232.5M | $639.2M | $737.7M | | Deduct: Capital expenditures of continuing operations ($M) | $(245.1)M | $(347.8)M | $(493.9)M | $(664.3)M | | Free cash flow from continuing operations (Non-GAAP, $M) | $15.6M | $(115.3)M | $145.3M | $73.4M |