Dollar Tree reported gaining market share with higher-income consumers and may offset President Donald Trump’s tariffs by raising prices on some products. CEO Michael Creedon noted observing ‘value-seeking behavior across all income groups.’ While Dollar Tree traditionally relied on lower-income shoppers and derived about 50% of its business from middle-income consumers, sustained inflation has led to ‘stronger demand from higher-income customers,’ Creedon said during an analyst call.
Dollar Tree’s success with higher-income shoppers mirrors Walmart’s gains with the cohort following prolonged high prices. Trump’s tariffs on goods from China, Mexico, and Canada, along with the potential for broad duties on trading partners worldwide, have heightened concerns about stretched household budgets. While Dollar Tree plans to mitigate tariff effects through supplier negotiations and manufacturing shifts, it may also hike prices on some items, Creedon stated.
Dollar Tree has introduced prices higher than its standard $1.25 products at about 2,900 multi-price stores, where certain products can cost anywhere from $1.50 to $7.
In its fiscal fourth-quarter earnings announcement, Dollar Tree also disclosed plans to sell its struggling Family Dollar chain for approximately $1 billion to a private equity consortium. Net sales for continuing operations totaled $5 billion for the quarter, with same-store sales climbing 2%. Adjusted earnings per share came in at $2.11 for the period.
For fiscal 2025, Dollar Tree anticipates net sales of $18.5 billion to $19.1 billion from continuing operations, with same-store sales growth of 3% to 5%. It expects adjusted earnings of $5 to $5.50 per share for the year.
Creedon mentioned that the expected impact from the first round of 10% tariffs Trump imposed on China in February would have been $15 million to $20 million per month, but the company mitigated about 90% of that effect. Additional 10% duties on China imposed this month, along with 25% levies on Mexico and Canada that have only partly taken effect, would hit Dollar Tree by another $20 million per month. The company is working to offset these duties but did not include them in its financial guidance due to uncertainty over which tariffs will take effect and when.
— news from CNBC
