Dollar Tree Expands to $3/$5 Tiers with 3.5% Sales Growth, EPS Outlook Raised
DLTR•Dollar Tree is expanding pricing tiers from $1 to $3 and $5, with a 3.5% comparable sales gain and a 120 basis-point gross margin rise to 36.9%, and raised its adjusted EPS outlook to $6.70–$7.10. Jefferies lifted its price target to $85 from $75, still below the $116.44 share price.
1. Pricing Strategy Shift
Dollar Tree is broadening its offering beyond the traditional $1 price point by introducing $3 and $5 tiers to capture higher spend per transaction and attract a wider customer base.
2. Quarterly Financial Performance
In the latest quarter, comparable sales increased 3.5% driven by a 4.5% rise in average transaction size despite a 1% traffic dip; gross margin expanded by 120 basis points to 36.9% on revenue of $4.97 billion and adjusted EPS of $1.74.
3. Analyst Price Target Adjustment
Jefferies raised its price target on the company to $85 from $75, maintaining a cautious stance as this new target remains below the prevailing $116.44 share price.
4. Outlook and Shareholder Returns
Management boosted the full-year adjusted EPS guidance to a range of $6.70 to $7.10 and authorized $595 million in share repurchases to enhance shareholder value.
