Dollar Tree, Inc. — Second Quarter Fiscal 2026 Earnings Summary

Financial Performance

• Net sales increased 7.0% year-over-year to $4.9 billion for the quarter; year-to-date net sales rose 7.1% to $9.9 billion.
• Diluted EPS was $2.70 for the quarter (260.0% increase year-over-year), including a $1.31 benefit from tariff refunds; year-to-date diluted EPS was $4.44.
• Operating income was $690 million for the quarter (198.7% increase year-over-year) and $1.16 billion year-to-date (89.1% increase).
• Operating income margin expanded 900 basis points to 14.1% in Q2 and 510 basis points to 11.8% year-to-date, both including a 650 basis point benefit from tariff refunds in Q2.
• Gross profit margin increased 850 basis points to 42.9% in Q2 (including 680 basis points from tariff refunds) and expanded 480 basis points to 39.8% year-to-date.
• Selling, general and administrative (SG&A) expenses decreased 40 basis points to 29.2% of revenue in Q2 and increased 10 basis points to 28.5% year-to-date.
• Net cash provided by operating activities was $922 million in Q2 and $1.57 billion year-to-date.
• Free cash flow was $675 million in Q2 and $1.07 billion year-to-date.
• The company repurchased 5.6 million shares for $605 million in Q2 and 11.1 million shares for $1.2 billion year-to-date.
• As of August 1, 2026, the company held $1.1 billion in cash and cash equivalents with $2.5 billion remaining under its share repurchase authorization.
• The company had no commercial paper outstanding and no borrowings under its revolving credit facility; long-term debt was $2.93 billion.

Guidance and Future Outlook

• Fiscal 2026 adjusted diluted EPS outlook increased to a range of $7.70 to $8.05, including an approximate $0.60 benefit from tariff refunds.
• Fiscal 2026 net sales guidance is $20.5 billion to $20.7 billion, based on comparable store net sales growth of 3% to 4%.
• Fiscal 2026 store activity guidance includes approximately 400 new openings and 75 closings.
• Third quarter fiscal 2026 net sales guidance is $5.0 billion to $5.1 billion, based on comparable store net sales growth of 3.0% to 4.0%.
• Third quarter fiscal 2026 adjusted diluted EPS guidance is $0.80 to $0.95, including an approximate $0.50 impact from tariff refund reinvestments.

Business Segments and Product Lines

• The company ended the quarter with 9,436 stores across Dollar Tree U.S. and Dollar Tree Canada banners.
• 75 new Dollar Tree stores were opened during the quarter.
• Approximately 710 stores were converted or added to the Dollar Tree multi-price format, bringing the total to approximately 6,600 multi-price stores.
• Comparable store net sales growth was driven by a 3.3% increase in average ticket and a 0.4% increase in traffic in Q2; year-to-date traffic decreased 0.3% while average ticket increased 3.9%.
• Transition services agreement income, net was $18 million in Q2 and $39 million year-to-date, related to services provided between Dollar Tree and Family Dollar following the sale.

Market and Competitive Landscape

• The company operates in the value retail sector, delivering value, convenience, and a "thrill-of-the-hunt" discovery experience.
• Gross margin improvements were driven by lower tariff rates, favorable shrink, and occupancy leverage, partially offset by sales mix.
• SG&A expense reductions in Q2 were primarily driven by lower payroll expenses, partially offset by higher marketing and depreciation.

Risks and Challenges

• The press release notes that tariff refunds and reinvestment plans are significant factors impacting financial results and future outlook.
• Forward-looking statements regarding business and financial outlook are subject to risks and uncertainties, including the direct and indirect impacts of current and potential tariffs and other trade-related measures.
• The company references risk factors in its Annual Report on Form 10-K and Form 10-Q regarding litigation, natural disasters, store portfolio optimization, and the sale of Family Dollar.

Management Commentary and Tone

• CEO Mike Creedon stated that positive traffic trends drove strong comparable sales growth and that EPS exceeded the high end of the outlook.
• Management highlighted strategies unlocking a better assortment in better-run stores and engaging customers in more relevant ways.
• The tone is confident, emphasizing progress made and a focus on investing in the customer experience, strengthening the business, and driving profitable long-term growth.

Other Key Points

• The company completed the sale of the Family Dollar business on July 5, 2025.
• Tariff refunds included $383 million in net impact, comprising $369 million in cost of sales and $14 million in interest income, net.
• Reinvestment expenses related to tariff refunds totaled $22 million in cost of sales and $15 million in SG&A expenses.
• Certain duties on aluminum pans and paper plates totaling $13 million were recorded in cost of sales.
• The company has a team of more than 150,000 associates and operates 19 distribution centers across 48 contiguous states and seven Canadian provinces.
• A conference call was scheduled for August 27, 2026, at 8:00 a.m. Eastern Time to discuss results.