Discount retailer Dollar Tree Inc (NASDAQ:DLTR) could show strength in traffic gains alongside concerns for tariffs when the company reports second-quarter financial results before market open Wednesday.
Here are the earnings estimates, what analysts are saying ahead of the report and the key items to watch.
Earnings Estimates
Analysts expect Dollar Tree to report second-quarter revenue of $4.48 billion, down from $7.38 billion in last year's second quarter, according to data from Benzinga Pro.
This marks the first quarterly results for Dollar Tree since spinning off Family Dollar earlier this year.
Dollar Tree has beaten analyst estimates for revenue in three straight quarters and beaten estimates in seven of the last 10 quarters overall.
Analysts expect Dollar Tree to report second-quarter earnings per share of 40 cents, down from 67 cents per share in last year's second quarter.
The company has beaten analyst estimates for earnings per share in three straight quarters and six of the last 10 quarters overall.
Guidance from the company calls for comparable net sales growth of 3% to 5%. The company said second-quarter earnings per share could be down 45% to 50% year-over-year.
Read Also: Board Member Of Dollar Tree Purchased $149K In Stock
What Analysts Are Saying
Analysts have been raising their price targets on Dollar Tree stock ahead of the quarterly financial results.
JPMorgan analyst Matthew Boss said data shows strong same-store sales for the retailer in the quarter, which could provide upside.
Boss reiterated an Overweight rating with a price target of $138.
The analyst estimates Dollar Tree to report same-store sales growth of 5.3% in the second quarter, ahead of consensus estimates of 4.7%.
Boss said the sale of Family Dollar and the net proceeds could be used to boost returns to shareholders.
Here are other recent analyst ratings on Dollar Tree and their price targets:
- Telsey: Upgraded from Market Perform to Outperform, raised price target from $100 to $130
- Evercore ISI: Maintained In-Line rating, raised price target from $108 to $110
- Piper Sandler: Maintained Neutral rating, raised price target from $93 to $112
- Truist: Maintained Buy rating, raised price target from $109 to $127
Key Items to Watch
Tariffs remain a key item to watch in Dollar Tree's report and have been a topic for the retailer for multiple quarters.
After the company's first-quarter financial results, Dollar Tree revealed its "5 levers mitigation strategy" meant to take on the tariffs and cost inflation.
Among the ways Dollar Tree is fighting against tariffs and higher costs are negotiating with suppliers, redesigning products, changing countries from which it imports, getting rid of items and utilizing the multi-price strategy.
Chief Financial Officer Stewart Glendinning previously said second-quarter profits could be "meaningfully" lower than the previous year due to tariffs and higher costs.
Dollar Tree executives noted that it was seeing increased traffic in recent months, including gains from customers with household incomes greater than $100,000.
Data from Placer.ai indicates Dollar Tree saw strong traffic gains in the second quarter and outpaced rival Dollar General Corp (NYSE:DG).
Placer.ai reported the following monthly visit gains for Dollar Tree:
- January: +12.1%
- February: +2.6%
- March: +3.2%
- April: +21.9%
- May: +10.4%
- June: +6.9%
- July: +8.1%
Overall, second-quarter visitor growth was 12.6% according to the report. The gains included an 8% gain for same-store visitors with this figure positive in the months of May, June and July after being negative in February and March.
For comparison, Placer.ai showed Dollar General with a 4.4% visitor gain in the second quarter with 2.9% same-store visitor gains. Dollar General's visitor traffic was up 6.9% in April. Up 4.2% in May and up 2.2% in June, according to the report.
Dollar General recently reported quarterly results with earnings per share and revenue each beating analyst estimates. The company's net sales were up 5.1% year-over-year in the second quarter with same-store sales up 2.8% year-over-year.
Dollar General raised revenue and earnings per share guidance after the quarterly results.
Dollar Tree reported an 11.3% net sales increase in the first quarter with same-store sales up 5.4%.
One of the highlights from the company was a 6.4% gain in consumable comparable sales and a 4.6% gain in discretionary comparable sales, the highest discretionary comp growth since the fourth quarter in 2022.
Analysts and investors will likely be looking for more data points on Dollar Tree gaining visitors and seeing strong growth of purchases of consumables and discretionary items.
With the new plan to offset tariffs and strong visitor growth shown in reports, a strong report is now expected from Dollar Tree along with raised guidance.
A miss or guidance staying the same could send shares lower after Dollar General's recent strong report.
DLTR Price Action: Dollar Tree stock is up 1.50% to $110.81 on Tuesday versus a 52-week trading range of $60.49 to $118.06. Dollar Tree stock is up more than 46% year-to-date.
Dollar General stock, on Tuesday at $109.87, also trades near 52-week highs ($110.50) with shares up more than 44% year-to-date.
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