Dollar Tree's Q1 Earnings & Sales Beat Estimates, Comps Rise 5.4%

Core Insights - Dollar Tree, Inc. (DLTR) reported strong first-quarter fiscal 2025 results, with earnings and sales exceeding expectations and showing year-over-year growth, driven by effective strategic initiatives [1][2][3] Financial Performance - Adjusted earnings per share (EPS) from continuing operations increased by 2.4% year over year to $1.26, surpassing the Zacks Consensus Estimate of$ 1.19 [1] - Net sales from continuing operations, excluding Family Dollar, rose by 11.3% year over year to $4.64 billion, exceeding the Zacks Consensus Estimate of$ 4.54 billion [2] - Same-store sales grew by 5.4% year over year, supported by a 2.5% increase in customer traffic and a 2.8% rise in the average ticket [2][8] - Gross profit increased by 11.7% year over year to $1.6 billion, with a gross margin expansion of 20 basis points to 35.6% [3] - Selling, general and administrative (SG&A) costs were 27.3% of sales, up 100 basis points from the previous year, influenced by higher depreciation, payroll, and utility costs [4] - Adjusted operating income rose by 1.4% year over year to$ 387.8 million, while the operating margin contracted by 80 basis points to 8.4% [5] Financial Health - As of the end of the first quarter, Dollar Tree had cash and cash equivalents of $1 billion, with no borrowings under its revolvers and no commercial paper outstanding [6] - Net merchandise inventories were$ 2.70 billion, reflecting a 9.8% year-over-year increase [6] - The company repurchased 5.9 million shares for $436.8 million during the quarter, with an additional 780 thousand shares bought for$ 67.5 million post-quarter [7] Strategic Initiatives - Dollar Tree opened 148 new stores and converted nearly 500 stores to the 3.0 multi-price format during the first quarter, bringing the total store count to 16,607 [11] - The company is in the process of selling its Family Dollar business for approximately $1.007 billion, with expected net proceeds of around$ 800 million [9][10] Future Outlook - Dollar Tree maintained its fiscal 2025 sales guidance, projecting net sales from continuing operations of $18.5-$ 19.1 billion, supported by same-store sales growth of 3-5% [12][13] - Adjusted EPS from continuing operations is projected to be $5.15-$ 5.65, reflecting impacts from share repurchases [13][14] - The company anticipates a decline in second-quarter adjusted EPS from continuing operations by 45-50% year over year, with expectations of recovery in the third and fourth quarters [16]