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Dollar Tree(DLTR) - 2026 Q1 - Earnings Call Transcript
DLTRDollar Tree(DLTR)2025-06-04 13:02
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Financial Data and Key Metrics Changes - In Q1, adjusted EPS from continuing operations was 1.26,exceedingthehighendoftheoutlookrangeof1.26, exceeding the high end of the outlook range of 1.10 to 1.25[22]−Revenueincreasedby11.31.25 [22] - Revenue increased by 11.3% year-over-year, driven by a 5.4% comparable store sales growth and a 7.4% increase in square footage [22] - Adjusted operating income was 388 million, a 1.4% increase from last year, while adjusted operating margin declined by 80 basis points [22][23] Business Line Data and Key Metrics Changes - Comp sales for consumables increased by 6.4%, while discretionary comp sales rose by 4.6%, marking the highest discretionary comp since Q4 of 2022 [9] - Revenue contribution from non-comp stores was up nearly 90% year-over-year, led by strength in the former 0.99onlyportfolio[9]MarketDataandKeyMetricsChanges−ThecompanygainedunitmarketshareinQ1,withnewcustomersandincreasedtripfrequencydrivingsharegains[10]−2.6millionnewcustomerswereaddedinQ1,witha90.99 only portfolio [9] Market Data and Key Metrics Changes - The company gained unit market share in Q1, with new customers and increased trip frequency driving share gains [10] - 2.6 million new customers were added in Q1, with a 9% increase in customers visiting stores three times a month or more [11] Company Strategy and Development Direction - The company is focused on expanding its footprint, recently opening its 9,000th store in Plano, Texas, and plans to convert approximately half of its store base to the Multi-Price format by year-end [8][13] - The Multi-Price strategy is seen as a way to enhance agility and meet customer needs across various economic conditions [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by tariffs and inflation but expressed confidence in their ability to mitigate these impacts using five strategic levers [14][18] - The full-year adjusted EPS outlook was updated to a range of 5.15 to 5.65,reflectingongoingsharerepurchases[18][27]OtherImportantInformation−ThecompanyreceivedU.S.regulatoryapprovalforthesaleofFamilyDollar,whichisexpectedtocloseinearlysummer[19]−Thecompanyendedthequarterwith5.65, reflecting ongoing share repurchases [18][27] Other Important Information - The company received U.S. regulatory approval for the sale of Family Dollar, which is expected to close in early summer [19] - The company ended the quarter with 1 billion in cash and cash equivalents, maintaining ample liquidity [24][33] Q&A Session Summary Question: What will be the offset that Dollar Tree is able to achieve in the back half of the year? - Management stated that they have created a more nimble company capable of addressing volatility and can offset tariff impacts over time using their five levers [41][42] Question: Can you maintain a gross margin of 35% to 36% despite current tariffs? - Management expressed confidence in maintaining gross margins through effective product assortment and leveraging their five levers for cost mitigation [48][49] Question: What is happening at the $1.50 price point? - Management clarified that they are strategically focused on customer needs and leveraging the Multi-Price strategy to meet those needs without drastically changing their pricing model [52] Question: How is the inventory composition changing? - The company noted a 10% increase in inventory, with some impact from tariffs, and emphasized the importance of maintaining quality and availability for customer satisfaction [90][92]