Average ticket and traffic gains spurred by middle-and higher-income households helped propel Dollar Tree to a second-quarter comparable sales advance and an income increase that beat a Wall Street estimate.
Income from continuing operations was $514.5 million, or $2.70 per diluted share, versus $155.5 million, or 75 cents per diluted share, in the quarter a year before.
Adjusted for any one-time events, income from continuing operations was $514.5 million, or $2.70 per diluted share, versus $159.2 million, or 77 cents per diluted share, in the year-previous period, the company maintained.
A second-quarter analyst consensus estimate from Zacks Investment Research called for earnings of $1.14 per adjusted diluted share and revenues of $4.91 billion.
Income from continuing operations included a diluted earnings per share benefit of $1.31 benefit related to IEEFA tariff refunds.
Comparable sales advanced 3.7%, driven by a 3.3% increase in average ticket and a 0.4% increase in traffic, Dollar Tree noted.
Total revenue was $4.89 billion versus $4.57 billion in the year-prior quarter.
Operating income was $690.1 million versus $231 million in the year-earlier period, while adjusted operating income was $690.1 million versus $236 million.
Among the highlights of the quarter, according to Dollar Tree, were the opening of 75 new stores and the conversion of 710 stores to the company’s multi-price format. The company finished the quarter with about 6,600 multi-price stores.
Dollar Tree set full-year guidance at net sales from continuing operations of $20.5 billion to $20.7 billion, comparable store net sales growth of 3% to 4% and adjusted diluted EPS of $7.70 to $8.05 including a 60 cent benefit related to tariff refunds. The company previously issued full-year guidance of net sales from continuing operations in the range of $20.5 billion to $20.7 billion, with comp growth in the range of 3% to 4%and adjusted diluted earnings per share in the range of $6.70 to $7.10.
Mike Creedon, Dollar Tree CEO, said in a conference call, “Customers continue managing household budgets carefully, shopping with purpose, and prioritizing value and affordability. Our data shows we grew sales across all income cohorts. Households we serve were up nicely year over year with gains skewing to the middle- and higher-income households. Comp strength was broad-based across the assortment with personal care and toys notable outperformers. Discretionary performed well and consumables delivered exceptional comp growth.”
Creedon added, “What continues to set Dollar Tree apart is our ability to deliver value, convenience and the excitement of discovery all in one shopping trip. Positive traffic trends helped drive strong comparable sales growth and EPS exceeded the high end of our outlook. Our strategies are unlocking a better assortment in better-run stores, while allowing us to engage customers in more relevant and compelling ways. While we are proud of the progress we have made, we are even more focused on the opportunities ahead as we continue investing in the customer experience, strengthening the business, and driving profitable long-term growth.”
