Dollar Tree Q2 Earnings & Sales Beat Estimates, Comps Rise 6.5%

Dollar Tree, Inc. DLTR posted solid second-quarter fiscal 2025 results, with both earnings and sales beating the Zacks Consensus Estimate and rising year over year. Quarterly results benefited from the sturdy execution of its strategic initiatives.Dollar Tree’s adjusted earnings per share (EPS) from continuing operations jumped 13.2% year over year to 77 cents and beat the Zacks Consensus Estimate of 38 cents. Dollar Tree, Inc. Price, Consensus and EPS Surprise Dollar Tree, Inc. price-consensus-eps-surprise-chart | Dollar Tree, Inc. QuoteShares of Dollar Tree fell over 10% in the pre-market session after its second-quarter fiscal 2025 announcement. A weak third-quarter adjusted EPS view might have hurt investors’ sentiments. However, shares of this Zacks Rank #3 (Hold) company have gained 16.2% in the past three months against the industry’s 3.7% decline.DLTR Stock's Price PerformanceImage Source: Zacks Investment ResearchDLTR’s Quarterly Performance: Key Metrics & InsightsNet sales from continuing operations, excluding Family Dollar, improved 12.3% year over year to $4.57 billion and surpassed the Zacks Consensus Estimate of $4.45 billion. Same-store sales (comps) grew 6.5% year over year. The company’s comps benefited from a 3% rise in traffic and a 3.4% increase in the average ticket.The gross profit jumped 12.9% year over year to $1.6 billion, with a 20-basis-point (bps) gross margin expansion to 34.4%, primarily backed by reduced domestic freight costs, improved mark-on from pricing initiatives, occupancy costs owing to leveraged sales and favorable mix, somewhat offset by higher distribution, shrink markdown and tariff costs. We estimated a year-over-year increase of 5% in gross profit and a 130-bps contraction in the gross margin.Selling, general and administrative (SG&A) costs were 29.6% of sales, up 60 bps from the year-earlier quarter. The rise was caused by elevated depreciation expenses from store investments, increased store payroll from pricing initiatives and higher wages, general liability claims and utilities costs. The increase was partially offset by lower stock compensation, lower general liability expenses and sales leverage. On an adjusted basis, the SG&A expense rate increased 50 bps to 29.4%.Adjusted operating income inched up 7.4% year over year to $236 million. The operating margin contracted 20 bps to 5.2%.DLTR’s Financial HealthDollar Tree ended the fiscal second quarter with cash and cash equivalents of $666.3 million, no borrowings under its revolvers, and no commercial paper outstanding. As of Aug. 2, 2025, net merchandise inventories were $2.60 billion, up 4.4% year over year. It had a net long-term debt, excluding the current portion, of $2.43 billion and shareholders’ equity of $3.60 billion as of Aug. 3, 2025.In second-quarter fiscal 2025, the company repurchased 5 million shares for $501.4 million. It had bought an additional 0.6 million shares for $71 million subsequent to the end of the quarter. Dollar Tree had $2.4 billion remaining under the $2.5 billion repurchase authorization as of Aug. 3, 2025.On May 15, 2025, the company leveraged a combination of cash and its commercial paper program to redeem its $1.0 billion 4% Senior Notes. As of June 2, 2025, it had $300 million of commercial paper notes outstanding.On July 5, 2025, the company completed the sale of the Family Dollar business for $1.0 billion, subject to customary adjustments. Net proceeds included $665 million received at closing, $22 million expected within 90 days, and $113 million monetized before closing, totaling about $800 million in cash. The sale is also expected to generate approximately $425 million in tax benefits.Family Dollar’s results are reported as discontinued operations in Dollar Tree’s financial statements, with prior periods restated for consistency. All other figures reflect continuing operations.Dollar Tree’s Store UpdateIn the second-quarter fiscal 2025, DLTR opened 106 Dollar Tree stores and converted nearly 585 stores to the 3.0 multi-price format. At the end of second quarter fiscal 2025, the company operated 9,148 stores.Q3 & FY25 Guidance by DLTRDollar Tree presented its fiscal 2025 sales guidance on a continuing operations basis, which includes the Dollar Tree segment, corporate, support and other functions. The company’s outlook assumes that the level of tariffs in place as of Sept. 3, 2025, is in effect for the rest of the fiscal year. It is likely to mitigate the majority of the incremental margin pressures from increased tariffs and other input costs.The company projects net sales from continuing operations of $19.3-$19.5 billion as compared to $18.5-$19.1 billion mentioned earlier, supported by comps growth of 4-6% versus 3-5% mentioned earlier. Adjusted EPS from continuing operations is projected to be $5.32-$5.72, including the year-to-date share repurchase impacts. Additional share repurchases are not reflected in the revised outlook. It had earlier envisioned the metric to be $5.15 to $5.65.For the third quarter of 2025, management expected a positive timing benefit of roughly $0.20 on adjusted diluted EPS from continuing operations. However, this benefit will reverse in the third quarter of 2025, resulting in adjusted diluted EPS for the quarter being comparable to the third quarter of 2024.Key PicksSome top-ranked stocks are Levi Strauss & Co. LEVI, Genesco Inc. GCO and Torrid Holdings CURV.Levi designs and markets jeans, casual wear and related accessories for men, women and children. It flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Levi’s current fiscal-year earnings indicates growth of 4% from the year-ago actual. LEVI delivered a trailing four-quarter average earnings surprise of 25.9%.Genesco operates as a retailer and wholesaler of footwear, apparel and accessories, carrying a Zacks Rank of 2 (Buy) at present. GCO delivered a trailing four-quarter earnings surprise of 28.1%, on average.The Zacks Consensus Estimate for Genesco’s current fiscal-year earnings and sales indicates growth of 67% and 3.7%, respectively, from the year-ago period’s reported figures.Torrid Holdings currently carries a Zacks Rank #2. The Zacks Consensus Estimate for Torrid Holdings’ 2025 sales and EPS indicates a decrease of 5.6% and 6.7%, respectively, from the year-ago period’s levels. CURV delivered a trailing negative four-quarter average earnings surprise of 10.5%.Higher. Faster. Sooner. Buy These Stocks NowA small number of stocks are primed for a breakout, and you have a chance to get in before they take off.At any given time, there are only 220 Zacks Rank #1 Strong Buys. On average, this list more than doubles the S&P 500. We’ve combed through the latest Strong Buys and selected 7 compelling companies likely to jump sooner and climb higher than any other stock you could buy this month.You'll learn everything you need to know about these exciting trades in our brand-new Special Report, 7 Best Stocks for the Next 30 Days.Download the report free now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Dollar Tree, Inc. (DLTR): Free Stock Analysis Report Genesco Inc. (GCO): Free Stock Analysis Report Levi Strauss & Co. (LEVI): Free Stock Analysis Report Torrid Holdings Inc. (CURV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks