01—Abstract
Summary
Summary of the 10-Q filed May 28, 2026. Cited figures are marked; the original filing is the authoritative source.
Dollar Tree, Inc. reported a solid first quarter for fiscal year 2026, demonstrating robust top-line growth and improved profitability.
Net sales increased by 7.2% to $4.97 billiona, driven by a 3.5% increase in comparable store net sales, reflecting strong execution of their multi-price strategy and effective inventory management. The company also benefited from the transition services agreement income related to the recent Family Dollar divestiture. Profitability saw significant improvement, with operating income increasing by 23.2% and the operating income margin expanding by 120 basis points to 9.5%.
This margin expansion was primarily attributed to a 120 basis point improvement in gross profit margin, a result of better mark-on from pricing initiatives, lower import freight costs, and reduced shrink, partially offset by higher tariffs. The company also successfully managed its selling, general, and administrative expenses as a percentage of revenue, demonstrating disciplined cost control following the strategic separation of Family Dollar.
02—Key points
Key Highlights
- Net sales grew 7.2% to $4.97 billion, driven by a 3.5% comparable store net sales increase.
- Gross profit increased 10.9% to $1.83 billion, with gross profit margin expanding 120 basis points to 36.8%.
- Operating income surged 23.2% to $473.3 million, with operating income margin improving to 9.5%.
- Income from continuing operations was $347.3 million, or $1.76 per diluted share, a notable increase from $1.47 per diluted share in the prior year.
- The company received approximately $110 million in refunds for previously paid tariffs under the International Emergency Economic Powers Act (IEEPA), providing a significant cash inflow.
- Significant share repurchases were made, with $600.4 million spent on repurchasing approximately 5.55 million shares during the quarter.
- The company initiated a new $500 million term loan to support its financial flexibility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2027, Dollar Tree, Inc. kept $0.07.
- Revenue$4.97B100.0%
- Cost of revenue−$3.14B63.2%
- Gross profit$1.83B36.8%
- Operating costs−$1.36B27.3%
- Operating income$473.3M9.5%
- Interest, other & tax−$126.0M2.5%
- Net income$347.3M7.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2027filed May 28, 2026Financial Statements
Q2 FY2027 against Q2 FY2026
| Line item | Q2 FY2027Q2 FY2026 | Change |
|---|---|---|
| Revenue | $4.97B$4.64B | +7.2% |
| Cost of Revenue | $3.14B$2.99B | +5.2% |
| Gross Profit | $1.83B$1.65B | +10.9% |
| SG&A Expenses | $1.38B$1.27B | +9.0% |
| Operating Income | $473.30M$384.10M | +23.2% |
| Net Income | $347.30M$343.40M | +1.1% |
| EPS (Basic) | $1.76$1.61 | +9.3% |
| EPS (Diluted) | $1.76$1.61 | +9.3% |
| Shares Outstanding (Basic) | 196.80M213.60M | −7.9% |
| Shares Outstanding (Diluted) | 197.40M213.90M | −7.7% |
05—Questions
Frequently Asked Questions
What drove the increase in net sales?
Net sales increased by 7.2% to $4.97 billion primarily due to a 3.5% comparable store net sales increase, driven by a 4.5% rise in average ticket, supported by targeted retail price changes and a higher mix of multi-price penetration. Sales from non-comparable stores also contributed $259.0 million.
How did the company manage its cost of sales and gross profit margin?
Gross profit margin improved by 120 basis points to 36.8%, driven by a 120 basis point decrease in the cost of sales as a percentage of net sales. This improvement was attributed to better mark-on from pricing initiatives, lower import freight costs, and reduced shrink, partially offset by higher tariff costs and markdowns.
What is the impact of the Family Dollar sale and the transition services agreement?
The sale of Family Dollar was completed in July 2025. The company recognized $21.1 million in transition services agreement income in the current quarter for services provided to Family Dollar. The results of Family Dollar are presented as discontinued operations in the prior year comparable period.
What is the company's liquidity and debt position?
The company generated $644.0 million in net cash from operating activities. They also entered into a $500 million term loan and had $1.5 billion available under their Five-Year Credit Facility. Long-term borrowings stood at $3.0 billion. They also repurchased $600.4 million of stock during the quarter.
06—Continue