By Neil J Kanatt May 28 (Reuters) – Dollar Tree raised its annual profit forecast on Thursday, buoyed by resilient demand for affordable essentials from budget‑conscious consumers and efforts to offset higher costs, sending its shares up about 19% in premarket trading. The company has been focusing on improving product selection to help attract value-focused […]
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Dollar Tree raises annual profit forecast on steady demand, shares jump
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By Neil J Kanatt
May 28 (Reuters) – Dollar Tree raised its annual profit forecast on Thursday, buoyed by resilient demand for affordable essentials from budget‑conscious consumers and efforts to offset higher costs, sending its shares up about 19% in premarket trading.
The company has been focusing on improving product selection to help attract value-focused shoppers, who are already grappling with higher living costs.
Dollar Tree has also moved away from its historic $1 model to a “multi‑price” strategy, with items priced at $1.25, $3, $5 and higher. This, along with easing freight expenses, has helped the company counter higher tariffs and supply chain costs.
For the first quarter, gross margins increased 120 basis point, helping the company post a 1% rise in net income and record per share profit of $1.74 that beat market estimates of $1.54, according to data compiled by LSEG.
The company maintained its annual net sales forecast and said it expected fiscal 2026 adjusted earnings of $6.70 to $7.10 per share, compared with its prior forecast of $6.50 to $6.90.
Discount retailers TJX and Ross Stores also raised annual forecasts. Recent U.S. retail earnings show higher-income Americans continue to spend despite rising fuel costs, with steady sales underscoring resilience even as budget pressures prompt trade-offs.
“Dollar Tree’s business remains solid and should continue to benefit from a stickier core consumer and gains from middle-to-upper-income consumers trading down as macro trends remain challenging,” Telsey Advisory analyst Joseph Feldman said.
The company, which sources a large portion of its imported merchandise from China, said it fiscal profit forecast excludes the impact of tariff refunds totaling about $110 million it received through May 26, after the Supreme Court struck down import tariffs that U.S. President Donald Trump introduced last year.
Sales rose 7.2% to $4.97 billion in the first quarter, narrowly beating analysts’ estimates of $4.96 billion.
(Reporting by Neil J Kanatt in Bengaluru; Editing by Shinjini Ganguli)