Dollar Tree's Strategy of Wider Product Offerings Aids in Q1 Revenue Growth
Dollar Tree Inc. has reported a significant growth in Q1, with a 11.3% increase in net sales to $4.6 billion. This upward trend is attributed to the company's strategic restructuring and focus on its core discount retail model, particularly the multi-price "3.0" format.
The 3.0 multi-price format, introduced a year ago, has been a game-changer for Dollar Tree. Moving beyond the traditional single-dollar price point, this format allows a broader price range while maintaining an average ticket price of about $1.35, with 85% of items priced under $2. This strategy has resulted in outperforming stores, boosting same-store sales, customer traffic, and discretionary spending. In Q1 alone, around 500 stores had been converted to this 3.0 format, contributing to a 5.4% rise in same-store sales.
The company expects ongoing expansion of this format to continue supporting traffic and ticket growth, fueling customer loyalty while keeping Dollar Tree's value proposition intact. The success of the 3.0 format is reflected in its outperformance compared to other store formats, providing a boost to traffic, ticket, comp, and discretionary mix.
The gains in Q1 were also driven by higher-income customers, with a meaningful traffic increase from customers with household incomes of more than $100,000. This growth is attributed to strong trends in immediate consumption purchases like candy, snacks, and beverages, as well as key discretionary categories.
Following the successful divestiture of the Family Dollar segment, Dollar Tree plans to use the proceeds to repay debt, repurchase shares, and fund growth initiatives such as new store openings and store remodels. The company projects $18.5 to $19.1 billion in net sales and adjusted EPS between $5.15 to $5.65 for fiscal 2025, including a forecasted same-store sales growth of 3–5%.
However, Dollar Tree anticipates a challenging second quarter due to higher tariffs and other costs, with EPS expected to decline by 45%-50% year over year. Despite these near-term margin pressures, the company remains confident in the multi-price format's contribution to growth.
Dollar Tree currently operates 16,607 stores across 48 states and five Canadian provinces under the brands of Dollar Tree, Family Dollar, and Dollar Tree Canada. The company is ranked No. 32 on The PG 100, Progressive Grocer's 2025 list of the top food and consumables retailers in North America.
Dollar Tree will host an Investor Day in New York on Oct. 15, providing an opportunity for stakeholders to gain further insights into the company's growth strategy. The deal to sell the Family Dollar business to Brigade Capital and Macellum Capital Management, which is on track for an early-summer close, has received U.S. regulatory approval.
Sources: [1] Dollar Tree Inc. (2025). Q1 Earnings Release. Retrieved from https://ir.dollartree.com/static-files/20f10q/2025/qtr1/2025-04-27-qtr1-earnings-release.pdf [2] Dollar Tree Inc. (2025). 2025 Q1 Earnings Call Transcript. Retrieved from https://seekingalpha.com/transcript/5232392-dollar-tree-inc-q1-2025-earnings-call-transcript [3] Dollar Tree Inc. (2025). 2025 Q1 Results - Earnings Call Transcript. Retrieved from https://www.nasdaq.com/articles/dollar-tree-q1-2025-earnings-call-transcript-2025-04-27
The success of Dollar Tree's 3.0 multi-price format, introducing a broader price range while maintaining an affordable average ticket price, has been instrumental in outperforming stores, boosting sales, customer traffic, and discretionary spending, as evident in the 5.4% rise in same-store sales from Q1. This format, positioned within the retail industry, is being expanded to continue fueling growth and customer loyalty.
The financial benefits of this strategy are not limited to increased sales; Dollar Tree expects to use the proceeds from the divestiture of the Family Dollar segment for initiatives such as new store openings and store remodels, contributing to the company's overall business growth.
