• Net Sales from Continuing Operations: Increased 0.7% to $5 billion.
• Net Sales from Discontinued Operations: Decreased 11.2% to $3.3 billion.
• Consolidated Net Sales: $8.3 billion, at the high end of the $8.1 billion to $8.3 billion outlook range.
• Q4 Comparable Store Sales (Comp): 2% increase.
• Consumables Comp: 4.2% increase.
• Discretionary Comp: 0.4% increase.
• Adjusted Operating Income: $628 million, a 15% decrease from last year.
• Adjusted Operating Margin: Declined 230 basis points.
• Adjusted EPS from Continuing Operations: $2.11.
• Adjusted EPS from Discontinued Operations: $0.18.
• Total Adjusted Enterprise EPS: $2.29.
• Inventory: Increased $176 million to $2.7 billion.
• Cash and Cash Equivalents: $1.3 billion at year-end.
• Free Cash Flow: $893 million for the full year.
• 3.0 Format Stores: Approximately 2,900 stores, with plans to reach 5,200 by the end of 2025.
• Q4 Traffic and Ticket Growth: Traffic up 0.7%, ticket up 1.3%.
• Q4 Gross Margin Decline: 130 basis points.
• Q4 SG&A Rate Increase: 100 basis points.
• Capital Expenditures for 2025: Expected to be $1.2 billion to $1.3 billion.
• 2025 Sales Outlook: $18.5 billion to $19.1 billion, with comparable store sales growth of 3% to 5%.
• 2025 Adjusted EPS Outlook: $5 to $5.50.

• Warning! GuruFocus has detected 4 Warning Signs with DLTR.

Release Date: March 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Dollar Tree Inc (NASDAQ:DLTR) announced the sale of its Family Dollar business for over $1 billion, allowing the company to focus solely on the Dollar Tree brand.
• The company reported a strong finish to 2024, with a 2% comparable store sales increase in Q4, driven by expanded multi-price offerings.
• Dollar Tree Inc (NASDAQ:DLTR) is seeing increased demand from higher-income customers, which helps offset other market headwinds.
• The company plans to expand its 3.0 store format, which has shown a 220 basis point comp lift compared to other formats.
• Dollar Tree Inc (NASDAQ:DLTR) has successfully mitigated 90% of the cost impact from the first round of tariffs through strategic sourcing and pricing adjustments.

Negative Points

• The sale of Family Dollar will result in Dollar Tree Inc (NASDAQ:DLTR) bearing the full cost of corporate shared services until the transition is complete.
• The company faces ongoing challenges from tariffs, with potential exposure of $20 million per month from the second round of tariffs if unmitigated.
• Dollar Tree Inc (NASDAQ:DLTR) reported a 15% decrease in adjusted operating income for Q4, with a decline in gross margin and increased SG&A expenses.
• The transition year of 2025 is expected to bring about 50 to 80 basis points of SG&A deleverage due to increased store payroll and IT spending.
• The company experienced a shortfall in the number of 3.0 store conversions in 2024, which fell below target, impacting potential growth.

Q & A Highlights

Q: Can you discuss the potential mitigation strategies for the tariffs and your confidence in offsetting them? Also, how important are new price points in this context? A: Mike Creedon, CEO: We've been working on our tariff strategy for a while, having offset 90% of the first round. For the second round, we continue to leverage tools like changing specs, negotiating with suppliers, and utilizing multi-price options. The uncertainty around tariffs remains, but we are positioned better than ever to manage this volatility.

Q: How does Dollar Tree plan to use its balance sheet to offset potential margin impacts from tariffs and support EPS? A: Stewart Glendinning, Chief Transformation Officer: We have a healthy balance sheet and plan to return cash to shareholders, likely through share repurchases. Additionally, we have inventory that is not yet tariffed, providing a baked-in benefit to our P&L.

Q: What is your philosophy on managing margins and investments given the current economic challenges? A: Mike Creedon, CEO: We are excited about Dollar Tree's standalone potential. Despite inflationary pressures, our investments in stores and distribution centers, along with our expanded assortment, position us well for long-term growth and margin management.

Q: Can you elaborate on the trends among different income groups and the drivers of your Q1 comp guidance? A: Mike Creedon, CEO: We see value-seeking behavior across all income groups, with higher-income customers increasingly shopping at Dollar Tree. Our Q1 comp guidance is driven by new store openings, multi-price maturation, and improved holiday calendars, among other factors.

Q: What are the priorities for product categories, especially in discretionary and seasonal items? A: Mike Creedon, CEO: Our focus is on exceeding customer expectations, particularly during holidays. We aim to balance consumables and discretionary items, with a strong emphasis on seasonal and holiday offerings to drive customer engagement and sales.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.