Why Dollar Tree Stock Was Sliding Today

Core Viewpoint - Dollar Tree reported better-than-expected second-quarter results but faced investor concerns over tariff-related challenges, leading to a decline in stock price despite positive earnings and revenue growth [1][6]. Financial Performance - Same-store sales increased by 6.5%, driven by a 3% rise in customer traffic and a 3.4% increase in average transaction value [3]. - Revenue grew by 12.3% to $4.57 billion, surpassing estimates of $4.48 billion [3]. - Gross margin improved slightly from 34.2% to 34.4%, while adjusted selling, general, and administrative expenses rose by 50 basis points to 29.4% due to wage increases and higher depreciation [4]. - Adjusted earnings per share (EPS) rose by 13.2% to $0.77, significantly exceeding estimates of $0.41, aided by a one-time benefit of $0.20 from inventory mark-up and tariffs [4]. Strategic Developments - The company completed the sale of Family Dollar in July, marking the end of a financially challenging period since its acquisition for $8.5 billion a decade ago [5]. - For the full year, Dollar Tree expects revenue between $19.3 billion and $19.5 billion, an increase from the previous range of $18.5 billion to $19.1 billion, with comparable sales growth projected at 4%-6% [7]. - The adjusted EPS guidance for the full year was raised from $5.15-$5.65 to $5.32-$5.72, compared to the consensus estimate of $5.47 [7]. Market Reaction - Despite the positive financial results and raised guidance, investors reacted negatively due to concerns about tariffs and flat EPS guidance for the third quarter [6][7]. - The stock price fell by 8.8% shortly after the earnings report was released [1].