Dollar Tree Q3 Earnings & Sales Beat Estimates, Comps Rise 4.2%

Dollar Tree, Inc. DLTR posted solid third-quarter fiscal 2025 results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate and increased 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 12% year over year to $1.21 and beat the Zacks Consensus Estimate of $1.09.DLTR’s Quarterly Performance: Key Metrics & InsightsNet sales increased 9.4% year over year to $4.75 billion and marginally beat the Zacks Consensus Estimate of $4.74 billion. Same-store sales (comps) grew 4.2% year over year. The company’s comps benefited from a 0.3% decline in traffic and a 4.5% increase in the average ticket.The gross profit jumped 10.8% year over year to $1.7 billion, with a 40-basis-point (bps) gross margin expansion to 35.8%. This improvement was fueled by stronger mark-on from pricing actions, reduced domestic and import freight costs and a healthier sales mix. These gains were partly offset by higher tariff expenses, increased markdowns and elevated shrink levels. We estimated a year-over-year increase of 10% in gross profit and a 40-bps expansion in the gross margin.Selling, general and administrative (SG&A) costs were 29.2% of sales, up 140 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, and general liability claims. The increase was partially offset by lower stock compensation, corporate payroll and sales leverage. On an adjusted basis, the SG&A expense rate increased 130 bps to 29.1%.Adjusted operating income inched up 4.1% year over year to $345.3 million. The operating margin contracted 30 bps to 7.3%.DLTR’s Financial HealthDollar Tree ended the fiscal third quarter with cash and cash equivalents of $594.8 million, no borrowings under its revolvers and $620 million of commercial paper outstanding. As of Nov. 1, 2025, net merchandise inventories were $2.86 billion, up 7.02% sequentially. It had a net long-term debt, excluding the current portion, of $2.43 billion and shareholders’ equity of $3.46 billion as of Nov. 1, 2025.In third-quarter fiscal 2025, the company repurchased 4.1 million shares for $399 million. It had bought an additional 1.7 million shares for $176 million subsequent to the end of the quarter. Dollar Tree had $2 billion remaining under the $2.5 billion repurchase authorization as of Nov. 1, 2025.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 third-quarter fiscal 2025, the company opened 106 Dollar Tree stores and converted nearly 646 stores to the 3.0 multi-price format. At the end of the third quarter of fiscal 2025, DLTR operated 9,269 stores.Q4 & 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 outlook also assumes that the current tariff levels as of Dec. 3, 2025, will remain unchanged 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 $19.35-$19.45 billion, supported by comps growth of 5-5.5% versus 4-6% mentioned earlier. Adjusted EPS from continuing operations is projected to be $5.60-$5.80, 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 $5.32-$5.72.For the fourth quarter of 2025, the company projects net sales from continuing operations between $5.4 billion and $5.5 billion, supported by expected comparable-store sales growth of 4.0% to 6.0%. Adjusted diluted EPS from continuing operations is anticipated to fall within the $2.40 to $2.60 range.Shares of this Zacks Rank #3 (Hold) company have gained 11.7% in the past three months compared with the industry’s 0.2% rise.Image Source: Zacks Investment ResearchKey PicksBoot Barn Holdings BOOT operates specialty retail stores in the United States and internationally, and carries a Zacks Rank #2 (Buy) at present. BOOT delivered a trailing four-quarter earnings surprise of 5.4%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for Boot Barn Holdings’ current financial-year sales and earnings indicate growth of 16.2% and 20.5%, respectively, from the year-ago reported numbers.American Eagle Outfitters AEO operates as a multi-brand specialty retailer in the United States and internationally, and currently carries a Zacks Rank of 2. AEO delivered a trailing four-quarter earnings surprise of 35.1%, on average.The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year sales indicates a decline of 0.1% from the year-ago period reported number.Stitch Fix, Inc. SFIX engages in the provision of clothing and accessories in the United States, and currently carries a Zacks Rank of 2. SFIX delivered an average earnings surprise of 53.7% in the last four quarters.The Zacks Consensus Estimate for Stitch Fix’s current financial-year sales indicates growth of 4.12% from the year-ago figure.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.See "2nd Wave" AI stocks 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 American Eagle Outfitters, Inc. (AEO): Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis Report Stitch Fix, Inc. (SFIX): 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