Dollar Tree (DLTR) investor relations material

Executive summary

• Net sales rose 7.2% year-over-year to $5.0 billion in Q1 2026, with comparable sales up 3.5% driven by higher average ticket and improved traffic trends.

• Adjusted EPS increased 38% to $1.74, and diluted EPS from continuing operations was $1.76, with operating income up 23% to $473 million and margin expanding to 9.5%.

• Free cash flow reached $392 million, with $1 billion in cash at quarter end and $595 million in share repurchases.

• Opened 113 new stores and converted or added about 630 stores to the multi-price format, ending the quarter with 9,382 stores.

• Macro environment remains dynamic, with customers prioritizing value and convenience amid higher fuel costs and inflation.

Financial highlights

• Gross profit increased 10.9% to $1,829.5 million, with gross margin expanding 120 basis points to 36.8% due to higher merchandise margin, lower shrink, and freight favorability.

• Operating income grew 23% to $473 million, with adjusted operating margin up 110 basis points to 9.5%.

• Net cash provided by operating activities was $644 million; free cash flow reached $392 million.

• Net sales per selling square foot was $242, up from $235 year-over-year.

• Inventory declined 9% versus prior year, supporting working capital efficiency and fresher assortments.

Outlook and guidance

• Fiscal 2026 net sales expected between $20.5–$20.7 billion, with comparable sales growth of 3–4%.

• Adjusted diluted EPS guidance raised to $6.70–$7.10, reflecting Q1 strength, lower tariffs for part of the year, and lower share count.

• Q2 2026 net sales projected at $4.8–$4.9 billion, with comparable sales growth of 2.5–3.5% and adjusted EPS of $1.00–$1.15.

• Plans for approximately 400 new store openings and 75 closings in fiscal 2026; capital expenditures projected at $1.1–$1.2 billion.

• Guidance assumes higher fuel costs persist and no benefit from potential tariff refunds.