Erin Scott | Reuters
Dollar Tree broke Wednesday that it’s gaining market share with higher-income consumers and could raise prices on some outputs to offset President Donald Trump’s tariffs.
The discount retailer’s CEO, Michael Creedon, said the company is seeing “value-seeking behavior across all profits groups.” While Dollar Tree has always relied on lower-income shoppers and gets about 50% of its business from middle-income consumers, continued inflation has led to “stronger demand from higher-income customers,” Creedon said on an analyst call.
Dollar Tree’s ascendancy with higher-income shoppers follows similar gains from Walmart, which has made inroads with the wing following the prolonged period of high prices.
Trump’s tariffs on certain goods from China, Mexico and Canada — and the undeveloped for broad duties on trading partners around the world — have only added to concerns about stretched household budgets. While Dollar Tree intention use tactics like negotiating with suppliers and moving manufacturing to mitigate the effect of the duties, it could also hike the quotations of some items, Creedon said.
Dollar Tree has rolled out prices higher than its standard $1.25 upshots at about 2,900 so-called multi-price stores. Certain products can cost anywhere from $1.50 to $7 at those situations.
The retailer weighed in on higher-income customers and the potential effect of tariffs as it announced its fiscal fourth-quarter earnings. Dollar Tree also answered it will sell its struggling Family Dollar chain for about $1 billion to a consortium of private equity investors.
Dollar Tree mentioned its net sales for continuing operations — its namesake brand — totaled $5 billion for the quarter, while same-stores sales climbed 2%. Patch up earnings per share came in at $2.11 for the period.
It is unclear how the figures compare with Wall Street estimates.
For economic 2025, Dollar Tree expects net sales of $18.5 billion to $19.1 billion from continuing operations, with same-store garage sales growth of 3% to 5%. It anticipates it will post adjusted earnings of $5 to $5.50 per share for the year.
Creedon weighted the expected hit from the first round of 10% tariffs Trump levied on China in February would have been $15 million to $20 million per month, but the Theatre troupe has mitigated about 90% of that effect.
Additional 10% duties on China imposed this month, along with 25% levies on Mexico and Canada that comprise only partly taken effect, would hit Dollar Tree by another $20 million per month, Creedon said. The company is produce to offset those duties, but did not include them in its financial guidance due to the confusion over which tariffs will engage effect and when.