Dollar Tree's Earnings Outperform 1.74% Stock Decline as $760M Trading Volume Marks Sharp Drop from Previous Day

On September 4, 2025, Dollar Tree (DLTR) reported a 1.74% decline in its stock price with a trading volume of $0.76 billion, a 52.82% drop from the previous day. The company’s Q2 2025 earnings highlighted a 12.3% year-over-year revenue increase to $4.6 billion, driven by 6.5% comparable store sales growth. Adjusted earnings per share (EPS) rose to $0.77, exceeding expectations, while gross margin expanded by 20 basis points to 34.4%. The company completed 3,600 store conversions to its 3.0 format and plans to reach 5,000 by year-end. Share repurchases totaled $1 billion year-to-date, with 11.6 million shares repurchased at an average price of $86.

Positive momentum was attributed to a 3% rise in customer traffic and 3.4% growth in average ticket size, fueled by expanded product assortments and strong performance across income segments. Nearly two-thirds of new customers came from households earning $100,000 or more, reflecting broadened appeal. The company’s multi-price strategy, which includes a mix of $1, $2, and $3 items, supported customer retention and value perception. Executives emphasized resilience in discretionary and consumable categories, with 6.7% and 6.1% comp sales growth, respectively.

Challenges persist, including rising tariffs on imports from Vietnam, India, and Bangladesh, which remain a key cost pressure. General liability settlement costs and increased shrinkage expenses also weighed on margins. Management acknowledged uncertainty in consumer behavior amid economic volatility but expressed confidence in mitigating risks through supplier negotiations, SKU rationalization, and selective pricing adjustments. The partnership with Uber Eats is expected to attract younger demographics, though its long-term impact remains to be seen.

For the full year, Dollar Tree raised its outlook to $19.3–19.5 billion in revenue and $5.32–5.72 in adjusted EPS. While tariffs and input costs are expected to impact the back half of the year, executives remain optimistic about maintaining gross margins through strategic cost controls. The company plans to open 254 new stores, including 42 former Party City locations, and continue store conversions to enhance productivity.

The stock closed at $102.38, down from $111.36 before earnings, reflecting mixed market sentiment. Despite strong operational results, investors remain cautious about near-term margin pressures and the broader economic environment.