Dollar Tree, Inc. reported financial results for the first quarter ended May 3, 2025, indicating strong performance across various metrics. The company, which operates discount variety stores selling items predominantly for $1.25 or less, showed a year-over-year increase in net sales of 11.3%, reaching $4.6 billion. Same-store sales also increased by 5.4%, driven by a 2.5% increase in traffic and a 2.8% increase in the average ticket.

Adjusted diluted earnings per share from continuing operations amounted to $1.26, exceeding the guided range of $1.10 to $1.25. This reflects a 2.4% increase from the prior year. Operating income from continuing operations was $384 million, slightly up by 0.6%, while adjusted operating income rose 1.4% to $388 million.

The gross margin expanded by 20 basis points to 35.6%, primarily due to lower freight costs and improved mark-on offset by increased distribution and markdown costs. Selling, general, and administrative expenses also saw a rise, increasing from 26.3% to 27.3% as a percentage of total revenue. This increase was driven largely by higher depreciation expenses and wage-related payroll increases, along with costs related to general liability claims and utilities.

For the first quarter, Dollar Tree added 148 new stores, bringing its total store count to 9,016. The company is focused on expanding its multi-price assortment, having completed approximately 500 store conversions to its 3.0 format. Cash generated from continuing operating activities was $379 million, with free cash flow reaching $130 million.

As for guidance, Dollar Tree reiterated its full-year fiscal 2025 net sales outlook in the range of $18.5 billion to $19.1 billion and updated its adjusted EPS outlook to $5.15 to $5.65, reflecting share repurchases completed to date. This forecast assumes current tariff conditions remain steady. The company anticipates second-quarter adjusted EPS from continuing operations could decrease by as much as 45% to 50% year-over-year, impacted by increased costs, particularly from tariffs.

Inventory levels rose by 10% to $2.7 billion, attributed to higher product receipts, and the square footage increased by 7.4% from the previous year. Dollar Tree maintained cash and cash equivalents of $1 billion, with no borrowings under its revolver or commercial paper outstanding. The anticipated sale of Family Dollar, expected to be finalized in the second quarter, is projected to add approximately $800 million in net proceeds, further enhancing Dollar Tree’s liquidity position.

Overall, the strong results in Q1 showcase the company’s positive performance trajectory, supported by effective expense management and the ongoing execution of its growth strategy.