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DOLLAR TREE, INC. (DLTR) Q4 2025 Earnings Summary

Executive Summary

  • Q4 2025 consolidated revenue was $8.27B, at the high end of guidance, while continuing operations (Dollar Tree segment) net sales were $5.00B; adjusted EPS was $2.29 at the enterprise level and $2.11 for continuing operations .
  • Against S&P Global consensus, consolidated EPS beat by ~$0.09 ($2.29 vs $2.20*) and revenue modestly beat ($8.27B vs $8.24B*), catalyzed by stronger holiday sell-through and multi-price assortment traction; continuing ops comp of +2.0% was balanced (+0.7% traffic, +1.3% ticket) .
  • Management announced a definitive agreement to divest Family Dollar for $1,007M with estimated net proceeds of ~$804M and ~$350M cash tax benefits, enabling focus and capital allocation on Dollar Tree’s growth; closing expected ~Q2 2025 .
  • FY 2025 guidance (continuing ops) initiated: net sales $18.5–$19.1B, adjusted EPS $5.00–$5.50, with ~$0.30–$0.35 EPS headwind from only half-year TSA reimbursement; Q1 2025 guide: net sales $4.5–$4.6B, EPS $1.10–$1.25 .

What Went Well and What Went Wrong

What Went Well

  • “We finished 2024 on a high note with strong execution at Dollar Tree,” highlighting holiday strength and expanded multi-price assortment driving momentum .
  • Multi-price 3.0 stores delivered measurable lifts: +220 bps comp vs other formats, with traffic +20 bps and ticket +200 bps; seasonal comps at 3.0 stores saw double-digit lifts in Thanksgiving and Christmas categories .
  • Consolidated revenue landed at high end of the Q4 outlook range ($8.27B vs $8.1–$8.3B guide), supported by non-comp stores including former 99 Cents Only locations .

What Went Wrong

  • Continuing ops gross margin contracted 130 bps YoY to 37.6% on lower initial mark-on, higher shrink, distribution and markdown costs, and loss of leverage from the prior year’s 53rd week; SG&A rate increased 260 bps to 27.0% due to software impairments, stock comp, and professional fees tied to the Family Dollar sale decision .
  • Q4 included a $25M anti-dumping duty accrual (continuing ops), and adjusted operating margin fell 230 bps to 12.6% despite freight tailwinds, highlighting inflationary and tariff pressures .
  • Year-over-year adjusted EPS for continuing ops declined to $2.11 (-15.3%), reflecting margin compression and higher SG&A, even as comps improved sequentially .

Financial Results

Consolidated vs Continuing Operations (Quarterly)

MetricQ2 2025Q3 2025Q4 2025
Consolidated Total Revenue ($USD Billions)$7.38 $7.57 $8.27
Consolidated Adjusted Diluted EPS ($)$0.67 $1.12 $2.29
Continuing Ops Total Revenue ($USD Billions)$4.07 $4.34 $5.00
Continuing Ops Diluted EPS ($)$0.66 $1.08 $1.86
Continuing Ops Adjusted Diluted EPS ($)$0.68 $1.08 $2.11
Continuing Ops Gross Margin (%)35.4% 35.4% 37.6%
Continuing Ops Operating Margin (GAAP, %)5.3% 7.6% 10.7%
Continuing Ops Operating Margin (Adj, %)5.4% 7.6% 12.6%

Comps, Traffic, Ticket (Dollar Tree Segment)

KPIQ2 2025Q3 2025Q4 2025
Same-Store Sales (Dollar Tree)+1.3% +1.8% +2.0%
Traffic YoY+1.4% +1.5% +0.7%
Ticket YoY-0.1% +0.3% +1.3%

Segment Breakdown (Dollar Tree)

MetricQ2 2025Q3 2025Q4 2025
Net Sales ($USD Billions)$4.07 $4.34 $5.00
Gross Margin (%)34.2% 35.4% 37.6%
SG&A Rate (%)25.8% 24.6% 22.4%
Operating Margin (%)8.4% 10.7% 15.2%

KPIs and Operating Metrics

KPIQ4 2025
Stores Opened (Quarter)33 new Dollar Tree stores
Dollar Tree Store Count (End of Q4)8,881
3.0 Multi-Price Stores (Year-End)~2,900 (2,600 conversions, 300 new)
Sales per Square Foot (Dollar Tree, FY)$232
Consumables Mix (Dollar Tree, Q4)45.2%
Free Cash Flow (Continuing Ops, FY)$892.8M

Results vs S&P Global Consensus (Consolidated)

MetricQ4 2025 ConsensusQ4 2025 ActualSurprise
Revenue ($USD Billions)$8.24*$8.27 +$0.03B
EPS ($)$2.20*$2.29 +$0.09

Values with an asterisk were retrieved from S&P Global.

Why: Beats driven by holiday assortment execution, multi-price ticket lift, and contribution from non-comp stores; ongoing shrink/distribution/markdown pressures and anti-dumping accrual tempered margin expansion .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales (Continuing Ops)FY 2025N/A$18.5–$19.1B New
Adjusted Diluted EPS (Continuing Ops)FY 2025N/A$5.00–$5.50 (includes ~$0.30–$0.35 TSA timing headwind) New
Net Sales (Continuing Ops)Q1 2025N/A$4.5–$4.6B New
Adjusted Diluted EPS (Continuing Ops)Q1 2025N/A$1.10–$1.25 New
Net Interest & OtherFY 2025N/A~+$115M New
Effective Tax RateFY 2025N/A~25.2% New
Capital ExpendituresFY 2025N/A$1.2–$1.3B New
TSA ReimbursementH2 FY 2025N/A~$95M (H2 only) New
Share RepurchasesFY 2025Not in guide$952M capacity remaining under authorization (not included in outlook) Maintained (capacity)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025, Q3 2025)Current Period (Q4 2025)Trend
Multi-Price 3.0 rolloutQ2: ~1,600 conversions; Q3: ~2,300; 3.0 comps +3.3%, discretionary modestly positive ~2,900 3.0 stores year-end; 3.0 comps +220 bps vs others; ticket +200 bps; strong seasonal lift Strengthening execution; ticket-driven lift
Tariffs & mitigationQ3: detailed mitigation playbook (supplier negotiations/spec changes/country shifts/multi-price) 90% offset of first 10% China tariff; second round exposure ~$20M/month pre-mitigation; price points testing (e.g., $1.50/$1.75) Active mitigation; residual risk remains
Supply chain/DCsQ2: Marietta DC tornado losses insured; network pressure Replacing Marietta capacity; converting Odessa DC to Dollar Tree; elevated stem mile costs until replacement Transitional; capex to rebuild capacity
Shrink & freightQ2/Q3: lower freight tailwinds; shrink actions help modestly Q4: freight tailwind partially offset by higher shrink; $25M anti-dumping duty Mixed tailwinds; discrete cost headwinds
Family Dollar strategyQ2: review initiated; Q3: progressing Definitive sale agreement at $1,007M; net proceeds ~$804M; ~$350M cash tax benefits Separation catalyst
Consumer cohortsQ3: lower-income needs-based shift; middle/higher-income belt-tightening Middle-income focusing on value; trade-in from higher-income; balanced traffic/ticket Value-seeking persists

Management Commentary

  • CEO on strategic focus: “With the sale of Family Dollar set to close later this year, we will be able to fully dedicate ourselves to Dollar Tree’s long-term growth, profitability, and returns on capital.”
  • CFO (incoming) on 2025 shape: “While we will receive TSA income in the second half… we will incur these costs over the entire year. This negatively impacts our adjusted EPS by approximately $0.30 to $0.35.”
  • CEO on multi-price momentum: “Fourth quarter results reflect the positive impact of our expanded assortment… with our newest multi-price offerings… driving strong year-end sell-through.”
  • CEO on tariffs: “We have offset more than 90% of this incremental cost [first 10% China tariff]… and are working to mitigate the latest round of tariffs.”

Q&A Highlights

  • Tariff mitigation and pricing: Management quantified second-round exposure (~$20M/month pre-mitigation), highlighted levers (spec changes, supplier concessions, origin shifts), and selective price point tests to preserve value perception .
  • 3.0 format performance and rollout cadence: Strong cohort maturation and seasonal discretionary strength; 2025 plan targets ~2,000 conversions and ~300 new stores, with stricter execution readiness to sustain performance .
  • Margin philosophy: Transitional year with shared cost burden; multiyear algorithm envisioned with improving gross margin, eventual SG&A leverage, and EPS growth augmented by capital returns .
  • Combo stores unwind and TSA mechanics: ~1,000 combo stores convey with Family Dollar; TSA offsets arrive H2, making EPS back-half weighted alongside holiday calendar tailwind .
  • Gross margin drivers: Modest freight benefits; multi-price maturation; offsets include distribution costs and tariff uncertainty; clarity that first-round tariffs are embedded in outlook .

Estimates Context

  • Q4 2025 consolidated EPS beat consensus ($2.29 actual vs $2.20*), while consolidated revenue modestly beat ($8.27B actual vs $8.24B*). Continuing ops adjusted EPS was $2.11; S&P consensus tracks enterprise “Primary EPS,” which aligned with the $2.29 actual .
  • FY 2025 consensus EPS ~$5.42* compares to management’s adjusted EPS guide $5.00–$5.50; consensus revenue ~$30.87B* refers to consolidated, while company’s FY 2025 guide ($18.5–$19.1B) is continuing ops only, reflecting separation .

Values with an asterisk were retrieved from S&P Global.

Key Takeaways for Investors

  • Separation catalyst: Family Dollar sale and associated cash proceeds/tax benefits provide balance sheet flexibility and sharpen the Dollar Tree growth story; expect investor rerating towards a single-banner, discretionary-led model .
  • Near-term EPS cadence: 2025 EPS back-half weighted due to TSA timing and holiday calendar; de-risking actions on tariffs underway, but residual policy uncertainty remains .
  • Multi-price continues to drive ticket and seasonal strength; 3.0 expansion and cohort maturation support comp and margin trajectory into H2 .
  • Margin mix: Freight tailwinds and mark-on improvements are offset by shrink/distribution/markdowns and anti-dumping accrual; watch shrink initiatives and supply chain normalization (Marietta replacement) .
  • Capital allocation: Expect share repurchases to resume post-closing given ~$952M authorization remaining and improved cash position; debt refinancing planned following May maturity .
  • Estimates setup: Post-print beats vs S&P consensus and conservative guidance (TSA impact) suggest potential for upward revisions if tariff mitigation and multi-price lifts persist; note consolidated vs continuing ops differences for modeling .
  • Trading lens: Positive narrative inflection on separation and multi-price execution vs lingering tariff/shrink headwinds; monitor Q1 comp/traffic/ticket and margin progression for confirmation of 2025 back-half EPS ramp .

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