May 28 - Dollar Tree said on Thursday it has increased its annual profit forecast, citing steady demand from budget-conscious shoppers for low-cost staples and its own measures to blunt the effect of higher costs. The announcement sent the company’s shares higher by roughly 12% in premarket trading.
The company pointed to several operational drivers behind the stronger outlook: customers prioritizing value amid rising living expenses tied to elevated gasoline prices related to the war in Iran; refreshed store layouts; expanded product assortments; and more effective seasonal merchandising. These factors, the company said, helped lift sales at its dollar-store locations.
Dollar Tree, headquartered in Chesapeake, Virginia, has moved away from its long-standing single-price model and now employs a multi-price strategy with items at $1.25, $3, $5 and above. That pricing approach, together with lower freight costs, has been cited as a means of countering increased tariffs and other supply-chain expenses.
The retailer kept its annual net sales guidance unchanged and raised its fiscal 2026 adjusted earnings-per-share forecast to a range of $6.70 to $7.10, up from a previous $6.50 to $6.90 range. The company said this EPS guidance does not incorporate the effect of tariff refunds, which it quantified as about $110 million through May 26.
Dollar Tree noted it sources a significant share of its imported merchandise from China and continues to face pressure from import tariffs that were introduced last year and later struck down by the Supreme Court, according to the company’s statement.
For the first quarter, the retailer reported sales of $4.97 billion, narrowly exceeding analysts’ estimates of $4.96 billion, based on LSEG-compiled data. Quarterly net income translated to earnings of $1.74 per share, topping the market consensus of $1.54 per share.
Gross profit margin was up 120 basis points in the quarter, reflecting the combined impact of merchandising changes and cost dynamics the company has described. Management highlighted freight-cost relief and pricing flexibility as contributors to improved margin performance, while noting that tariff-related pressures remain a factor.
Investors reacted positively to the results and the raised EPS outlook in premarket trading, reflecting renewed confidence in the company’s ability to navigate cost headwinds while meeting consumer demand for value-priced goods.