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Dollar Tree reported quarterly revenue of $4.9 billion, up from $4.6 billion a year earlier. Revenue exceeded the consensus by 0.65%, while adjusted earnings per share, as counted by the consensus, were $1.39 against an estimate of $1.13.
The company attributed sales growth to comparable-store gains and sales at newer stores. Its filing said a higher average customer purchase reflected earlier price changes and a greater share of sales from multi-price merchandise; customer traffic also increased.
Dollar Tree reported gross margin of 42.9%, compared with 34.4% a year earlier. The filing attributed the improvement principally to tariff refunds, alongside lower tariff costs and improved inventory-loss results, partly offset by higher markdowns and certain import duties. Operating margin rose to 14.1% from 5.05%.
The company reported diluted earnings per share of $2.70, compared with $0.91 a year earlier. CEO Mike Creedon said the latest figure included $1.31 from the combined net effect of tariff refunds, reinvestment and certain duties. Dollar Tree reported free cash flow of $674.6 million, up from $16.4 million.
| Q2 FY2027 | Q2 FY2026 | Change | |
|---|---|---|---|
| Revenue | $4.9 billion | $4.6 billion | 7.02% |
| Diluted EPS | $2.70 | $0.91 | 196.7% |
| Gross margin | 42.9% | 34.4% | 8.5 percentage points |
| Operating margin | 14.1% | 5.05% | 9.1 percentage points |
| Free cash flow | $674.6 million | $16.4 million | 4,013.4% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $1.39 | $1.13 | Beat by 23.0% |
| Revenue | $4.9 billion | $4.9 billion | Beat by 0.65% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
CEO Mike Creedon said customers were managing household budgets carefully and prioritizing affordability. Dollar Tree grew sales across income groups, he said, with gains in households served skewing toward middle- and higher-income customers. He said personal care and toys were among the categories that outperformed.
Creedon told analysts that traffic strengthened as the quarter progressed and turned positive earlier than the company had expected. He attributed the improvement to a broader assortment, better-run stores and different customer outreach. The anniversary dollar-price promotion involved a small number of rotating items and was not a key driver of comparable sales, he said.
On pricing, Creedon said multi-price merchandise gives Dollar Tree flexibility to offer different items and pack sizes while retaining dollar-priced goods where they meet its value and economic requirements. He also said helium shortages constrained the party business and that the company was working with suppliers; Dollar Tree was not assuming a near-term recovery in its outlook.
Asked about profitability, CFO Stewart Glendinning said sales and margins exceeded expectations apart from the net tariff benefit. He attributed margin performance to improved inventory-loss results, freight costs and leverage on fixed costs as sales grew. He said the inventory-loss benefit included both inventory count results and a reserve adjustment.
Creedon said Dollar Tree was directing tariff-refund proceeds toward pricing, marketing, store operations and store conditions. Asked about returns on that spending, Glendinning said the company was cautious in estimating outcomes because competitors were also investing in prices and some spending was intended to improve store standards and messaging over time.
For the months ahead, Glendinning said lower tariff rates than previously assumed would help absorb merchandise inflation and higher fuel-related supply-chain costs. He said a greater share of consumables in the sales mix would also affect margin, while Dollar Tree sought to avoid passing those costs on to customers.
Guidance
Dollar Tree raised its full-year adjusted diluted earnings-per-share outlook to $7.70 to $8.05 from $6.70 to $7.10. CFO Stewart Glendinning said the updated range includes an approximately $0.60 net benefit from tariff refunds. He also said the company lowered its expectations for transition-services income and net interest expense from its previous assumptions.