Dollar Tree Beats Q2 Estimates and Raises Full-Year Outlook but Soft Q3 Guide Sends Shares Lower

Dollar Tree posted fiscal second-quarter net sales of $4.89 billion, up 7% year over year and ahead of the roughly $4.86 billion Wall Street expected, while adjusted EPS of $2.70 crushed the consensus estimate of around $1.14 to $1.15. The outperformance was heavily shaped by $383 million in IEEPA tariff refunds that added $1.31 per share and accounted for 650 of the 900 basis points of operating margin expansion, pushing operating margin to 14.1%. Gross margin widened 850 basis points to 42.9%.

Comparable-store net sales rose 3.7%, topping estimates of 3.14%, with consumables comps up 5.8% and discretionary up 1.6%. The company generated $921.5 million in operating cash flow and $675.2 million in free cash flow, and repurchased $605 million worth of shares, retiring 5.6 million. Results are reported on a continuing-operations basis following the completed sale of Family Dollar.

Dollar Tree raised its full-year fiscal 2026 adjusted EPS guidance to $7.70 to $8.05, up from a prior range of $6.70 to $7.10, well above the $7.04 analyst estimate, and embedded approximately $0.60 of net tariff refund benefit in that outlook. Full-year net sales guidance of $20.5 billion to $20.7 billion roughly matches the $20.65 billion consensus. The company plans about 400 new store openings against roughly 75 closings.

Despite the strong quarter and raised annual outlook, shares fell approximately 6.9% in premarket trading after the third-quarter guide disappointed: Dollar Tree projected Q3 adjusted EPS of $0.80 to $0.95, far below the $1.39 consensus, and net sales of $5.0 billion to $5.1 billion. Management attributed the near-term profit squeeze specifically to a $0.50 per share headwind from reinvesting tariff refunds back into the business, not to softening demand, with traffic trends described as positive heading into the period.