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1. Company Snapshot

1.a. Company Description

Dollar Tree, Inc.operates discount variety retail stores.It operates in two segments, Dollar Tree and Family Dollar.


The Dollar Tree segment offers merchandise at the fixed price of $ 1.25.It provides consumable merchandise, including candy and food, and health and personal care, as well as everyday consumables, such as household paper and chemicals, and frozen and refrigerated food; variety merchandise comprising toys, durable housewares, gifts, stationery, party goods, greeting cards, softlines, arts and crafts supplies, and other items; and seasonal goods that include Christmas, Easter, Halloween, and Valentine's Day merchandise.As of January 29, 2022, this segment operated 8,061 stores under the Dollar Tree and Dollar Tree Canada brands, as well as 15 distribution centers in the United States and 2 distribution centers in Canada.


The Family Dollar segment operates general merchandise retail discount stores that offer consumable merchandise, which comprise food and beverages, tobacco, health and personal care, household chemicals, paper products, hardware and automotive supplies, diapers, batteries, and pet food and supplies; and home products, including housewares, home décor, and giftware, as well as domestics, such as comforters, sheets, and towels.It also provides apparel and accessories merchandise comprising clothing, fashion accessories, and shoes; and seasonal and electronics merchandise that include Christmas, Easter, Halloween, and Valentine's Day merchandise, as well as personal electronics, which comprise pre-paid cellular phones and services, stationery and school supplies, and toys.As of January 29, 2022, this segment operated 8,016 stores under the Family Dollar brand; and 11 distribution centers.


The company was founded in 1986 and is based in Chesapeake, Virginia.

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1.b. Last Insights on DLTR

Dollar Tree's recent performance was negatively impacted by a weaker-than-expected guide and tariff-related costs. Despite beating Q2 earnings and sales estimates with 6.5% comps growth, concerns about headwinds pressured shares. A downgrade from Jefferies to "underperform" also weighed on the stock. Additionally, soft demand, higher expenses, and a challenging near-term outlook added to investor concerns. The company, however, reaffirmed its FY25 view and outlined a three-year growth plan targeting 12-15% annual EPS gains.

1.c. Company Highlights

2. Dollar Tree's Q3 2025 Earnings: A Strong Performance

Dollar Tree's Q3 2025 results showcased a robust financial performance, with net sales increasing 9.4% to $4.7 billion, driven by a 4.2% comparable sales growth that was primarily ticket-driven. The company's adjusted EPS came in at $1.21, exceeding expectations of $1.09. Gross margin expanded 40 basis points to 35.8%, driven by merchandise margin, successful execution of merchant levers, and favorable freight. However, the SG&A rate increased 160 basis points to 26.2%, driven by higher store payroll and restickering costs.

Publication Date: Dec -04

📋 Highlights
  • Strong Sales Growth & EPS Outperformance:: Q3 net sales rose 9.4% to $4.7B, driven by 4.2% comp growth (ticket-driven), while adjusted EPS hit $1.21, 12% higher than prior year.
  • Discretionary Mix Improvement:: Discretionary business mix improved 40 bps to 50.5%, with comp sales up 4.8% in discretionary and 3.5% in consumables.
  • Customer Base Expansion:: 3 million additional households shopped with Dollar Tree, including 60% from higher-income demographics, driving broader customer reach.
  • Halloween Sales Success:: Halloween assortment generated record $200M in sales, highlighting the effectiveness of the multi-price strategy and product innovation.
  • Margin & Cost Management:: Gross margin expanded 40 bps to 35.8%, but SG&A increased 160 bps to 26.2% due to payroll and restickering costs, offset by $56M in SKU write-offs.

Segment Performance

The company's discretionary business saw a positive year-over-year mix shift, with a 40 basis point improvement in discretionary mix to 50.5%. Comp sales increased 4.8% in discretionary and 3.5% in consumables. The multi-price strategy continues to drive growth and profitability, with the Halloween assortment generating over $200 million in sales, an all-time record. As Michael Creedon noted, customers, whether new or frequent, find what they need at Dollar Tree, particularly in terms of affordability.

Operational Highlights

Inventory decreased $143 million, or 5%, versus the prior year, while sales increased 9.4%. The company generated $319 million in cash from operating activities and had capital expenditures of $376 million, resulting in negative free cash flow of $57 million. Year-to-date, the company generated $88 million of free cash flow and completed $1.5 billion of share repurchases.

Outlook and Valuation

The company expects Q4 comps to be between 4% and 6%, supporting net sales of $5.4 billion to $5.5 billion and adjusted EPS of $2.40 to $2.60. For the full year, the company expects comp growth of 5% to 5.5% and adjusted EPS of $5.60 to $5.80. With a current P/E Ratio of -7.78 and an EV/EBITDA of 16.52, the market appears to be pricing in some level of risk. However, the company's focus on value, convenience, and discovery is expected to drive loyalty across all income brackets.

Management Insights

Regarding traffic trends, Michael Creedon noted that the company looked at sales across all income cohorts and saw that core customers, earning around $60,000 a year, had the highest comps. Stewart Glendinning mentioned that SG&A came in better than expected due to savings targets and a focus on reducing costs.

3. NewsRoom

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Dollar Tree Inc (DLTR) Q3 2025 Earnings Call Highlights: Strong Sales Growth and Strategic Initiatives Drive Performance

Dec -04

Source: gurufocus.com

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Market Today: WBD Sale Bids, Meta Cuts, Apple Shake-Up

Dec -04

Source: gurufocus.com

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Why shoppers making six figures are giving Dollar Tree a boost

Dec -04

Source: foxbusiness.com

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Dollar Tree Stock Hits 52-Week Highs: Analyst Predicts Higher Earnings, Share Buybacks – 'Attractive Total Return For Shareholders'

Dec -04

Source: benzinga.com

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Dollar Tree Analysts Boost Their Forecasts Following Better-Than-Expected Q3 Earnings

Dec -04

Source: benzinga.com

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Edgestream Partners L.P. Trims Stake in Dollar Tree, Inc. $DLTR

Dec -04

Source: defenseworld.net

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Dollar Tree's Halloween Sales Were Scary Good, But There's A Twist

Dec -03

Source: seekingalpha.com

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This Discount Retailer Is the Latest to Get a Lift From Shoppers Searching for Deals

Dec -03

Source: investopedia.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.77%)

6. Segments

Dollar Tree

Expected Growth: 5.0%

Dollar Tree's 5.0% growth is driven by increasing consumer demand for affordable products, expansion into new markets, and strategic store renovations. The company's focus on everyday low prices, private label offerings, and efficient supply chain management also contribute to its growth. Additionally, the rise of budget-conscious consumers and the need for convenience shopping experiences further support Dollar Tree's growth momentum.

Family Dollar

Expected Growth: 4.5%

Family Dollar's 4.5% growth is driven by strategic store renovations, improved merchandise assortment, and enhanced customer experience. Additionally, Dollar Tree's cost savings initiatives, efficient supply chain management, and effective pricing strategies contribute to the segment's growth. Furthermore, the company's focus on private label products and opportunistic buying also support the growth momentum.

7. Detailed Products

Housewares

Dollar Tree offers a wide range of housewares including kitchen utensils, cleaning supplies, and home decor items

Health and Beauty

Dollar Tree sells a variety of health and beauty products including personal care items, cosmetics, and health supplements

Food and Beverages

Dollar Tree offers a selection of packaged snacks, beverages, and other food items

Party and Craft Supplies

Dollar Tree sells a range of party supplies, craft materials, and seasonal decorations

Seasonal and Holiday Items

Dollar Tree offers seasonal decorations, gifts, and other items for holidays and special occasions

Office and School Supplies

Dollar Tree sells a variety of office and school supplies including paper products, pens, and other essentials

Pet Food and Supplies

Dollar Tree offers pet food, toys, and other pet supplies

Automotive and Hardware

Dollar Tree sells a range of automotive and hardware items including tools, car care products, and more

8. Dollar Tree, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Dollar Tree's products are mostly undifferentiated, but the company's focus on $1 pricing and convenience stores in rural areas reduces the threat of substitutes.

Bargaining Power Of Customers

Dollar Tree's customers have some bargaining power due to the availability of substitutes, but the company's low prices and convenient locations mitigate this power.

Bargaining Power Of Suppliers

Dollar Tree's suppliers have limited bargaining power due to the company's large scale and ability to negotiate low prices.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry, including the need for significant capital investment and established supply chains.

Intensity Of Rivalry

The discount retail industry is highly competitive, with many established players competing for market share, which increases the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 40.31%
Debt Cost 3.95%
Equity Weight 59.69%
Equity Cost 8.56%
WACC 6.70%
Leverage 67.54%

11. Quality Control: Dollar Tree, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Walmart

A-Score: 5.5/10

Value: 2.4

Growth: 5.4

Quality: 4.8

Yield: 2.0

Momentum: 8.5

Volatility: 9.7

1-Year Total Return ->

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Dollar General

A-Score: 5.4/10

Value: 5.2

Growth: 5.6

Quality: 3.9

Yield: 3.0

Momentum: 9.0

Volatility: 5.7

1-Year Total Return ->

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Costco Wholesale

A-Score: 5.4/10

Value: 1.4

Growth: 7.0

Quality: 5.7

Yield: 2.0

Momentum: 6.0

Volatility: 10.0

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Ollie's Bargain Outlet

A-Score: 5.0/10

Value: 1.8

Growth: 7.7

Quality: 6.0

Yield: 0.0

Momentum: 9.0

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Target

A-Score: 5.0/10

Value: 6.8

Growth: 5.1

Quality: 4.7

Yield: 7.0

Momentum: 0.5

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
Dollar Tree

A-Score: 4.2/10

Value: 5.5

Growth: 3.2

Quality: 2.8

Yield: 0.0

Momentum: 8.5

Volatility: 5.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

115.87$

Current Price

115.87$

Potential

-0.00%

Expected Cash-Flows