Dollar Tree raises FY outlook, shares slide on margin concerns
By Iain Gilbert
Date: Wednesday 03 Sep 2025
(Sharecast News) - Discount retailer Dollar Tree posted stronger-than-expected second-quarter results on Wednesday, but saw shares fall sharply in pre-market trading as investors weighed margin dynamics and broader consumer headwinds.
Dollar Tree said net sales rose 12.3% year-on-year to $4.6bn, driven by a 6.5% increase in same-store sales, while Q2 profits came in at $0.57 per share, well above the $0.41 expected by analysts. Operating income was up 7.0% at $231m.
The Virginia-based company cited improved pricing, lower freight costs, and favourable tariff timing as key drivers of margin expansion, which expanded by 20 basis points to 34.4%, up from 34.2% in the same quarter last year. However, adjusted operating margins actually contracted by 20 basis points, suggesting that while gross profitability had improved slightly, operating expenses may have crept higher.
Dollar Tree also raised full-year guidance, lifting net sales expectations to $19.3bn-$19.5bn and adjusted earnings per share to $5.32-$5.72, up from prior ranges of $18.5bn-$19.1bn and $5.15-$5.65, respectively.
Despite the beat and the increased guidance, Dollar Tree shares headed south as market participants grew cautious about the sustainability of gains amid a volatile consumer backdrop, with the company noting that shrinkage and tariff costs remained a drag, while the macro environment continued to pressure discretionary spending.
Chief executive Mike Creedon said: "The strong sales growth, margin outperformance, and market share gains that Dollar Tree delivered in the second quarter against an increasingly challenging economic backdrop reinforces the unique position that Dollar Tree occupies in today's retail landscape. With the Family Dollar sale complete, Dollar Tree is now a fully focused business and every ounce of our leadership attention, capital investment, and operating resources is now directed toward strengthening the Dollar Tree brand."
As of 1425 BST, Dollar Tree shares were down 7.64% in pre-market trading at $102.84 each.
Reporting by Iain Gilbert at Sharecast.com
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