Dollar Tree Expands Customer Base, Analysts Split On Outlook As Tariff Pressures Loom

Core Viewpoint - Dollar Tree Inc. reported stronger-than-expected second-quarter results, leading to an Outperform rating and a price target of $130 from Telsey Advisory Group analyst Joseph Feldman [1] Financial Performance - Earnings per share (EPS) were reported at 77 cents, surpassing Feldman's estimate of 40 cents and the FactSet consensus of 42 cents [2] - Comparable-store sales increased by 6.5%, exceeding the forecast of 5% and the consensus of 5.4%, driven by balanced gains in traffic and ticket growth [2] Customer Demographics - Dollar Tree is increasingly appealing to middle- and upper-income households, adding approximately 2.4 million new customers in the past year, with two-thirds earning $100,000 or more [3] - The frequency of visits from shoppers coming to stores three or more times a month rose by roughly 11% [3] Product Strategy - The company is expanding its multi-price point product offerings to attract a broader customer base while maintaining value, with 85% of revenue still coming from items priced at $2 or less [3] Near-Term Challenges - Despite strong execution, there are near-term challenges such as weaker back-to-school sales, intensifying tariff pressures, and lower-than-expected TSA fee income from Family Dollar [4] Guidance Adjustments - Dollar Tree raised its full-year guidance for 2025 earnings to a range of $5.32 to $5.72 per share, above the previous range of $5.15 to $5.65 and the consensus of $5.52 [5] - Comparable sales guidance was also lifted to 4% to 6% from 3% to 5% [5] Future Projections - Feldman adjusted his third-quarter EPS forecast down to $1.10 from $1.36, below the consensus of $1.33, due to tariff timing and TSA fee pressure [6] - However, he raised his 2025 EPS estimate to $5.66 from $5.56 and his 2026 projection to $6.62 from $6.50, citing customer growth, margin improvement, and store conversions as key drivers [6] Analyst Sentiment - Analyst sentiment on Dollar Tree is mixed, with JPMorgan's Matthew Boss reiterating an Overweight rating and raising his price target from $138 to $140, while Truist Securities' Scot Ciccarelli maintained a Buy and increased his target from $127 to $129 [7] - Conversely, Piper Sandler's Peter Keith kept a Neutral stance and reduced his target from $112 to $108 [7]