Dollar Tree, Inc. (NASDAQ:DLTR) reported second quarter fiscal 2026 results that beat Wall Street estimates for both revenue and earnings, while raising its full-year adjusted earnings outlook.
Net sales increased 7% year over year to $4.9 billion, topping analyst estimates of roughly $4.85 billion to $4.86 billion.
Comparable store sales rose 3.7%, driven by a 3.3% increase in average ticket and a 0.4% increase in traffic.
Diluted earnings per share came in at $2.70, including a $1.31 benefit from the net impact of tariff refunds. Operating income reached $690 million, with the operating margin expanding 900 basis points to 14.1%. Tariff refunds accounted for 650 basis points of the margin improvement.
Gross profit margin increased 850 basis points to 42.9%, including a 680-basis-point benefit from the net impact of tariff refunds. The company generated $675 million in free cash flow during the quarter and repurchased 5.6 million shares for $605 million.
“What continues to set Dollar Tree apart is our ability to deliver value, convenience, and the excitement of discovery all in one shopping trip,” Dollar Tree CEO Mike Creedon said in a statement.
“Positive traffic trends helped drive strong comparable sales growth and EPS exceeded the high end of our outlook.”
Dollar Tree raised its fiscal 2026 adjusted EPS outlook to $7.70 to $8.05, including an estimated $0.60 benefit from the net impact of tariff refunds. Full-year net sales are expected to range from $20.5 billion to $20.7 billion, based on comparable store sales growth of 3% to 4%.
For the third quarter, the company expects net sales of $5.0 billion to $5.1 billion and comparable store sales growth of 3% to 4%. Adjusted diluted EPS is expected to range from $0.80 to $0.95, including an approximately $0.50 impact from tariff refund reinvestments.
Shares of Dolar Tree were down about 9% in early trading following the results, as investors appeared to focus on the weaker-than-expected third-quarter earnings outlook and the extent to which tariff refunds contributed to the quarter's earnings and margin gains.