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Investing.com - Dollar Tree has reported better-than-anticipated net sales in its fiscal first quarter as cost-conscious customers grappling with tariff-driven uncertainty sought out bargains, but the discount retailer flagged that profits in the current quarter would be hit by volatility around the levies.
Net sales for the period grew by 11.3% compared to a year ago to $4.6 billion, above Bloomberg consensus estimates of $4.53 billion.
Adjusted operating income climbed 1.4% to $388 million, reflecting non-operating insurance gains and strategic review costs. The figure translated to adjusted diluted earnings per share of $1.26.
“History has shown that we have the resilience to emerge stronger from periods of economic uncertainty and in today’s rapidly evolving environment, we see a meaningful opportunity to further elevate the value, convenience, and discovery that our customers depend on Dollar Tree to provide,” said CEO Mike Creedon in a statement.
The company noted that, should U.S. President Donald Trump’s aggressive tariffs remain in place for the remainder of the fiscal year, it "will be able to mitigate most of the incremental margin pressure."
Full-year fiscal 2025 net sales from continuing operations are tipped to be in a range of $18.5 billion to $19.1 billion, based on comparable store net sales growth of 3% to 5%. In the current quarter, comparable net sales are seen increasing "towards the higher end" of that range.
However, it warned of some "earnings volatility based on the timing of the various inputs and outputs" to its results. Dollar Tree flagged that that its quarterly adjusted earnings per share from continuing operations could be down as much as 45% to 50% year-over-year before "re-accelerating in the third and fourth quarters".
Shares in Dollar Tree (NASDAQ:DLTR) fell in premarket U.S. trading on Wednesday.
Expectations for strong returns from Dollar Tree were high following a solid earnings from Dollar General (NYSE:DG) earlier this week.
Dollar General posted quarterly net sales and earnings that topped Wall Street estimates, leading the group to raise its full-year financial forecast. The firm said that, following the outperformance, it expects that it will be able to offset a significant portion of the tariffs at their current rates. Consumer expenditures could face headwinds from levy-related price increases, however, Dollar General warned.