By Anuja Bharat Mistry and Chandni Shah
Dec 3 (Reuters) – Dollar Tree raised its annual profit forecast and beat quarterly estimates on Wednesday, as the discount retailer bets on steady demand for its affordable essentials to offset the impact of tariff-led uncertainty.
The company has been able to draw more customers from different income groups to its stores as a result of its strategy to expand product assortment at varied price points.
Dollar Tree said its Thanksgiving and Christmas assortments are resonating with customers and it saw strong demand for discretionary items such as home decor, as well as household cleaning, personal care, snacks and cookies.
Its shares rose about 1% in early trading after it forecast fiscal 2025 adjusted earnings in the range of $5.60 to $5.80 per share, compared with the prior forecast of $5.32 to $5.72.
“Dollar Tree is benefiting from a tough macro environment as penny-pinching consumers zero in on value,” Zak Stambor, an analyst with eMarketer said.
“Value is (on) top of mind for shoppers this holiday season, and retailers that can deliver it are best positioned to capture limited consumer spending”.
The company’s expenses as a share of its total revenue rose 140 basis points to 29.2% due to higher store wages, upgrade investments and liability-related costs, but was partly offset by lower domestic and import freight costs.
Dollar Tree, which offers $3 and $5 home decor items, has also been gaining from resilient shopping by households earning more than $100,000 per year.
“Growing trip frequency among these higher income customers, given their propensity to build bigger baskets, will be a powerful growth driver for Dollar Tree overtime” CEO Mike Creedon said in an earnings call.
The company posted third-quarter sales of $4.75 billion and adjusted profit of $1.21 per share, compared with analysts’ estimates of $4.70 billion and $1.09 per share, respectively, according to data compiled by LSEG.
(Reporting by Anuja Bharat Mistry and Chandni Shah in Bengaluru; Editing by Anil D’Silva and Arun Koyyur)
