What factors drove DLTR's EPS surprises in 2025?

The EPS surprise for Dollar Tree (DLTR) in 2025 was $0.1, with a diluted EPS of -$17.17 and total revenue of $5 billion for the quarter ending December 31, 2025. **Family Dollar Sale Impact**: The most significant factor driving the EPS surprise was the sale of the Family Dollar business segment to Brigade Capital Management and Macellum Capital Management for $1.007 billion. This strategic move allowed Dollar Tree to focus on its core business and potentially improve its profitability by shedding the unprofitable Family Dollar segment. The sale is expected to close in approximately 90 days, which could have significant financial implications for the company. |code|Ticker|Name|Date|Total Revenue|Diluted EPS|market_code| |---|---|---|---|---|---|---| |DLTR|DLTR.O|Dollar Tree|2025 Q1|7.6328E9|1.38|185| |DLTR|DLTR.O|Dollar Tree|2025 Q2|7.3788E9|0.62|185| |DLTR|DLTR.O|Dollar Tree|2025 Q3|7.5682E9|1.08|185| |DLTR|DLTR.O|Dollar Tree|2025 Q4|4.9998E9|-17.17|185| |code|Ticker|Name|Date|EPS Surprise|Diluted EPS|market_code| |---|---|---|---|---|---|---| |DLTR|DLTR.O|Dollar Tree|2025 Q1|0.01|1.38|185| |DLTR|DLTR.O|Dollar Tree|2025 Q2|-0.39|0.62|185| |DLTR|DLTR.O|Dollar Tree|2025 Q3|0.04|1.08|185| |DLTR|DLTR.O|Dollar Tree|2025 Q4|0.1|-17.17|185| **Sales and Revenue**: Despite the sale of Family Dollar, Dollar Tree's net sales increased by 0.7% to $5 billion in the fourth quarter. The company's total revenue guidance for fiscal 2025 was set at $18.5 billion to $19.1 billion, with same-store sales growth of 3% to 5%. The projected revenue aligns with the company's focus on growing its Dollar Tree brand through expanded product assortments and operational efficiencies. **Gross Margin and Operating Expenses**: The company's gross margin fell by 130 basis points to 37.6% in the fourth quarter, primarily due to the loss of leverage from an extra week of sales in 2023, lower initial mark-on, and higher shrink, distribution, and markdown costs. Additionally, the company faced challenges from higher tariffs and increased costs, which could have impacted its profitability. **Tariff Risks and Operational Adjustments**: Dollar Tree has been affected by tariffs on certain goods from China, Mexico, Canada, and other trading partners. To mitigate these risks, the company has been negotiating with suppliers and moving manufacturing to remedy potential costs associated with tariffs. These efforts could have an impact on the company's future profitability and should be monitored closely. **Dividend and Share Repurchases**: Dollar Tree has a history of returning value to shareholders through dividends and share repurchases. The company's focus on growing its Dollar Tree brand and improving operational efficiencies could lead to increased dividends or share buybacks in the future, which could positively influence the stock's performance. In conclusion, the EPS surprise for Dollar Tree in 2025 was primarily driven by the sale of the Family Dollar business segment, which allowed the company to focus on its core business and potentially improve its profitability. However, the company still faced challenges from declining gross margins and operating expenses, as well as the impact of tariffs on its supply chain. The company's strategic initiatives to mitigate these risks and its focus on growing its Dollar Tree brand could have a positive impact on its future earnings.