Dollar Tree, Inc. (DLTR) FY2025 10-K and Q2 FY2026 10-Q Summary

Business

Source: Annual Report on Form 10-K for fiscal 2025 (year ended January 31, 2026), accession 0000935703-26-000025; updated where noted from the Form 10-Q for the quarter ended August 1, 2026, accession 0000935703-26-000109.

Dollar Tree runs discount variety stores in the United States and Canada under the Dollar Tree and Dollar Tree Canada banners. Almost all of its revenue is the sale of merchandise in those stores: in fiscal 2025, net sales were $19,395.7 million of $19,411.8 million total revenue. Its opening price point is $1.25. A growing multi-price assortment sits above that, but most products are still priced at $1.25 and 85% of products in the average store cost $2.00 or less. The stores serve customers across a broad range of incomes, principally in suburban locations, and most have 8,000–10,000 selling square feet. At January 31, 2026, the company operated about 9,000 U.S. stores across 48 states and the District of Columbia and about 275 stores in seven Canadian provinces. By August 1, 2026 the total had reached 9,436 stores (10-Q). Canadian stores generally sell items for $1.75 (CAD) or less, and the company describes Canadian revenue and assets as not material.

What it sells. A store carries about 8,400 items. Fiscal 2025 net sales broke down across three merchandise categories, totaling $19,395.7 million:

• Consumable, $9,425.9 million (48.6%). Household paper and chemicals, food, candy, health and personal care, and in most stores frozen and refrigerated food.
• Variety, $8,860.5 million (45.7%). Toys, housewares, gifts, stationery, party goods, greeting cards, softlines, and arts and crafts.
• Seasonal, $1,109.3 million (5.7%). Christmas, Easter, Halloween and Valentine's Day merchandise.

Consumables drive store traffic, while discretionary variety and seasonal goods carry higher margins. The company has seen a multi-year shift in customer spending toward lower-margin consumables. Closeout and promotional goods are less than 10% of purchases, and the company is expanding its private-label range. Customers can also order online for delivery through Instacart (more than 8,400 stores) and Uber Eats (more than 8,800 stores serviceable at January 31, 2026). The 10-Q also lists DoorDash among the company's delivery partners.

Segments. In fiscal 2025 the company reported a Dollar Tree segment plus "corporate, support and other" (store support center costs and its Summit Pointe property in Chesapeake, Virginia). In the first quarter of fiscal 2026 it moved to a single reportable segment and recast prior periods to match (10-Q Note 8).

Sourcing and distribution. Direct imports are about 40% of retail-value purchases, and China supplies the vast majority of them. The company believes much of what it buys from domestic vendors is also imported. No vendor supplied more than 10% of merchandise in fiscal 2025. Stores get about 90% of their inventory from company distribution centers. At fiscal 2025 year-end there were 16 U.S. distribution centers totaling 15.0 million square feet, nearly all owned. Two expansion projects are under way:

• Phoenix, Arizona. The company bought this distribution center in October 2025 and opened it in May 2026. It ships to about 700 stores in Arizona, Colorado, Nevada, New Mexico and Utah. The 10-Q puts its size at 1.0 million square feet.
• Marietta, Oklahoma. A tornado destroyed the original Marietta distribution center in 2024. Reconstruction began in September 2025, and the new center is expected to be fully operational by spring 2027, serving about 700 stores in the West and Southwest.

The 10-Q reports 17 U.S. distribution centers at August 1, 2026. Canadian distribution is outsourced to two third-party facilities, one in British Columbia and one in Ontario.

People. At January 31, 2026 the company employed 153,032 associates: 35,181 full-time and 117,851 part-time. None are represented by unions.

Sale of Family Dollar. On July 5, 2025, Dollar Tree completed the sale of its Family Dollar business to 1959 Holdings, LLC. The sale generated about $793 million of cash in total: about $680 million of net proceeds, plus about $113 million raised mainly by reducing net working capital before closing. Writing the business down cost about $3.4 billion when it was classified as held for sale in fiscal 2024, and a further $407.7 million loss on disposal in fiscal 2025. Family Dollar is reported as discontinued operations, so Dollar Tree is now essentially a single-banner company. Obligations that continue after the sale:

• Transition services. The two companies provide services to each other for 18 months after the sale. This produced $54.9 million of net income in fiscal 2025.
• Lease guarantees. Dollar Tree guarantees leases on 114 Family Dollar stores: about $86.0 million in the first year after the sale, $20.0 million in the second and $10.0 million in the third.
• Litigation indemnity. Dollar Tree agreed to defend and indemnify Family Dollar against certain pre-sale product liability cases involving talc and acetaminophen products.

Strategy. At its Investor Day on October 15, 2025, management set out five priorities: a broader multi-price assortment, agile cost management, a better-connected customer experience, new store growth with better store conditions, and more consistent store operations. Supply chain, technology and workforce investment support all five. The Investor Day release (Form 8-K, accession 0000935703-25-000084) gave a three-year outlook of 12% to 15% compound annual EPS growth for fiscal 2026–2028. That figure is built on underlying annual EPS growth of 8% to 10%, plus the absence of recent one-time costs from tariff mitigation, multi-price conversions, lost distribution capacity and the Family Dollar sale. Management's long-term goal is to reduce corporate SG&A as a percentage of net sales. The company has never paid a cash dividend and returns capital through share repurchases.

Risk Factors

Source: Item 1A of the fiscal 2025 Form 10-K, accession 0000935703-26-000025. The fiscal 2026 second-quarter 10-Q (accession 0000935703-26-000109) reports no material changes beyond the developments described in its MD&A.

These are the substantive risks the company identifies, condensed:

• Cost pressure with limited pricing room. Merchandise, wages, freight, fuel, tariffs and occupancy costs keep rising. Most products sit at $1.25 and 85% at $2.00 or less, with fewer price bands than other retailers, so higher costs are hard to pass on without hurting perceived value. The company also expects more state and local minimum-wage increases in fiscal 2026. Unfavorable trends in general liability claims raised related expense by $20.4 million in fiscal 2024 and $33.6 million in fiscal 2025. Self-insurance liabilities rose to $327.2 million from $244.3 million.
• Tariffs and import dependence. About 40% of purchases are direct imports, mostly from China, so tariffs, trade restrictions and anti-dumping or countervailing duties feed directly into costs.
  • On February 20, 2026, the U.S. Supreme Court struck down tariffs imposed under the International Emergency Economic Powers Act (IEEPA). Temporary tariffs on all countries under Section 122 of the Trade Act of 1974 followed.
  • Separately, the U.S. Department of Commerce is examining whether imports of paper plates and aluminum pans circumvent earlier duty orders. A ruling for the petitioners could apply duties retroactively. The 10-K estimated the possible exposure at up to about $75 million for aluminum pans and $119 million for paper plates; the 10-Q lowered both estimates (see below).
  • Mitigation through price changes, product re-engineering and shifting country of origin brought significant labor and other one-time costs in fiscal 2025.
• Supply chain capacity and disruption. Three pressures stand out:
  • Distribution capacity is still being rebuilt after the 2024 Marietta tornado.
  • Freight costs could rise as the company shifts sourcing countries and relies more on the spot market.
  • Shipping faces the Red Sea, Persian Gulf and Panama Canal disruptions, driver shortages, port labor disputes and extreme weather.
• Growth execution. Growth depends on lifting sales in existing stores and on opening stores profitably. The company has seen higher construction, rent and fixture costs and delays from permitting and contractors, and it warns that new stores can take sales from nearby existing stores.
• Assortment and multi-price execution. If the expanded multi-price range blurs the brand's value message, or the company misreads customer trends, traffic and sales could fall.
• Consumer economics. Low-income customers are sensitive to inflation, unemployment, interest rates and changes in government benefits such as the Supplemental Nutrition Assistance Program (SNAP). Such pressure pushes spending toward lower-margin consumables.
• Competition. Barriers to entry are low. Competitors include dollar stores, mass merchants, warehouse clubs, grocers, drug and convenience stores, and online players, some with stronger e-commerce and AI capabilities.
• Seasonality. A disproportionate share of sales and profit comes in the fourth quarter. A shorter Easter selling season can hurt results; Easter fell on April 20, 2025 and April 5, 2026.
• Shrink and safety. Inventory loss and theft, including organized retail crime, have reached historically high rates. Store violence also poses risk to associates and customers.
• Product safety, litigation and regulation. The company faces recall risk, product liability (including talc and acetaminophen cases), and growing regulatory scrutiny of pricing and price clarity as the multi-price rollout expands.
• People. Lean store staffing, turnover and possible unionization pressure labor costs. Recent senior leadership turnover and the reorganization after the Family Dollar sale add execution risk.
• Strategic initiatives and the Family Dollar separation. After the sale the company is smaller and less diversified. It also carries stranded costs, indemnities and transition-service obligations that may not be fully recovered.
• Technology and cybersecurity. Legacy systems are being replaced at significant cost. The company and its vendors have had data security incidents, though none material to date. As a Level 1 merchant the company must keep PCI-DSS compliance to accept cards.
• Financing and stock. Seasonal working capital relies on credit facilities and a commercial paper program, so a ratings downgrade or market disruption would raise financing costs. The company also lists shareholder activism, share-price volatility and anti-takeover provisions in its articles and by-laws.

The second-quarter 10-Q's updated risk summary adds two items: the effects of tariffs, mitigation strategies and customer response, and the risk that the reinvestment of tariff refunds fails to deliver expected benefits. Its economic-conditions risk now names the availability of helium.

Management's Discussion and Analysis, Fiscal 2025

Source: Item 7 and Notes 5, 6, 13 and 15 of the fiscal 2025 Form 10-K, accession 0000935703-26-000025.

Sales. Net sales rose 10.4% to $19,395.7 million. Comparable store net sales rose 5.3%, from a 4.3% increase in average ticket and a 1.0% increase in traffic. Non-comparable stores added $1.4 billion. The higher ticket came mainly from targeted retail price increases in the second and third quarters of fiscal 2025 and from wider multi-price penetration. Those price increases hurt traffic, which declined in the third and fourth quarters. The company ended the year with 9,282 stores (402 opened, 71 converted from Family Dollar, 72 closed) and 82.6 million selling square feet. Net sales per selling square foot rose to $241 from $232.

Margins. Gross margin rose 60 basis points to 36.4%:

• Helped by better mark-on from pricing, lower domestic and import freight, a richer mix of discretionary goods, and occupancy leverage.
• Partly offset by higher tariff costs, shrink and distribution costs, and higher markdowns, including a $56.0 million write-off of slow-turning SKUs taken to improve shelf productivity.

The SG&A rate rose 70 basis points to 28.2%. Store payroll rose to support the pricing changes and wage increases, and incentive pay, depreciation and general liability claims also rose. Lower stock compensation, impairments and corporate payroll partly offset these. The prior year had included $58.0 million of software impairments and contract-termination costs tied to the Family Dollar decision. Transition-services income from Family Dollar added $54.9 million.

Earnings.

• Operating income rose 13.1% to $1,653.1 million, a margin of 8.5% versus 8.3%.
• Net interest expense fell $22.0 million to $85.5 million after the company repaid its $1.0 billion 4.00% Senior Notes on May 15, 2025.
• Other income of $61.9 million included a $62.0 million insurance gain related to the Marietta tornado.
• The effective tax rate was 24.8%.
• Income from continuing operations was $1,225.3 million, or $5.94 per diluted share, up from $1,042.5 million, or $4.83.
• Discontinued operations (Family Dollar) contributed $57.2 million of income after the $407.7 million loss on disposal, compared with a $4,072.6 million loss in fiscal 2024.

Cash and capital. Operating cash flow from continuing operations was $2,190.7 million, essentially flat. Accounts payable decreased and inventories were reduced, partly as a result of the shelf-productivity program, and lower tax payments reflected losses on the Family Dollar sale. Investing outflows fell to $648.7 million. They included the $680.0 million of Family Dollar net proceeds, less $246.0 million of cash divested with the business. Capital spending went to the new Phoenix and Marietta distribution centers.

Financing outflows were $2,556.9 million:

• Repurchases. 17,176,514 shares were bought back for $1.6 billion, leaving $1.8 billion of a $2.5 billion authorization at year-end.
• Note repayment. The $1.0 billion of senior notes was repaid.
• Commercial paper. The company issued and repaid $10.1 billion of commercial paper during the year.

At year-end long-term debt was $2,431.7 million, made up of three series of senior notes:

• $1,250.0 million of 4.20% notes due 2028
• $800.0 million of 2.65% notes due 2031
• $400.0 million of 3.375% notes due 2051

Fiscal 2026 capital expenditures were planned at about $1.1 billion to $1.2 billion.

Critical estimates. The 10-K names three areas of significant judgment: inventory valuation under the retail method (markdown and shrink estimates), self-insurance liabilities, and goodwill impairment for the Dollar Tree and Dollar Tree Canada reporting units. No impairment indicators existed at fiscal 2025 year-end.

Current Quarter, Fiscal 2026 Second Quarter (13 weeks ended August 1, 2026)

Sources: Form 10-Q for the quarter ended August 1, 2026, accession 0000935703-26-000109; earnings release furnished as Exhibit 99.1 to Form 8-K dated August 27, 2026, accession 0000935703-26-000108; Form 8-K dated March 23, 2026, accession 0000935703-26-000027.

Tariff refunds dominate the quarter. Underneath them, sales growth stayed steady and traffic turned positive.

Sales. Net sales rose 7.0% to $4,886.5 million. Comparable store net sales rose 3.7%, against 6.5% a year earlier, with average ticket up 3.3% and traffic up 0.4%. Non-comparable stores added $225.9 million. Ticket growth again came from the fiscal 2025 price changes and from more multi-price penetration. Global helium shortages hurt sales in the quarter, and the company warns they could continue to. About 710 stores were converted to or added in the multi-price format during the quarter, for about 6,600 multi-price stores in total (earnings release).

Tariff refunds and reinvestment. After the Supreme Court's February 2026 ruling, the Court of International Trade ordered refunds of IEEPA tariffs on March 4, 2026. U.S. Customs and Border Protection opened a claims process on April 20, 2026, and the company filed refund claims totaling $379 million that month. In the quarter it received about $369 million of refunds ($368.7 million), recorded as a reduction in cost of sales, plus $14 million of interest recorded in other income. It does not expect the remaining refunds to be material.

Management plans to reinvest a significant portion of the refunds over the rest of 2026:

• About $40 million to a philanthropic fund supporting associates and communities.
• Targeted pricing, marketing and messaging.
• Improvements to store conditions and operations.

The company expects reinvestment costs, including more markdowns and freight, to continue in the third and fourth quarters.

Margins and earnings. Gross margin was 42.9%, up from 34.4%:

• Tariff refunds contributed 755 basis points.
• Other gains came from lower tariff costs, lower shrink and occupancy leverage.
• Offsets were about $22.0 million of reinvestment markdowns, a $13.0 million charge for anti-dumping and countervailing duties on paper plates and aluminum pans, and a mix shift away from higher-margin discretionary goods.

The SG&A rate fell 40 basis points to 29.2%. The store labor needed for the fiscal 2025 pricing changes did not recur, and temporary multi-price labor, corporate payroll and consulting fees were all lower. Higher marketing (including reinvestment) and depreciation partly offset this. Transition-services income was $17.7 million, versus $8.0 million a year earlier.

Operating income was $690.1 million, up from $231.0 million, and the operating margin rose to 14.1% from 5.1%. The earnings release attributes 650 basis points of that margin increase to the net impact of tariff refunds. Income from continuing operations was $514.5 million, or $2.70 per diluted share, versus $155.5 million, or $0.75. The release puts the net tariff-refund benefit at $1.31 per share. The effective tax rate was 25.0%.

First half. Net sales were $9,857.0 million, up 7.1%. Comparable store sales rose 3.6%: average ticket was up 3.9% and traffic down 0.3%. Operating income was $1,163.4 million (11.8% margin), and income from continuing operations was $861.8 million, or $4.44 per diluted share. Operating cash flow from continuing operations was $1,565.5 million versus $639.2 million, helped by $383 million of tariff refunds, the timing of payables and inventory, and lower tax payments. Second-quarter free cash flow was $675.2 million (a non-GAAP measure in the earnings release).

Balance sheet and financing.

• Term loan. A $500.0 million term loan, entered into on March 19, 2026, matures on March 19, 2029.
• Revolver and commercial paper. The $1.0 billion 364-day revolving credit facility expired on March 20, 2026. With it, the commercial paper program's maximum fell back to $1.5 billion from $2.5 billion.
• Position at August 1, 2026. Long-term borrowings were $3.0 billion and cash and cash equivalents $1,058.1 million. Nothing was drawn on the $1.5 billion five-year revolver or the commercial paper program.

Share repurchases. In the quarter the company bought back 5,584,354 shares for $612.0 million, including excise tax. First-half repurchases were 11,136,764 shares for $1.2 billion. That total includes a $500.0 million block trade in June 2026 from selling stockholders, including funds affiliated with Mantle Ridge LP. In July 2026 the Board restored the authorization to $2.5 billion, and $2.49 billion remained at quarter-end.

Stores and supply chain. In the first half the company opened 188 stores and closed 34, ending with 9,436 stores and 84.0 million selling square feet. It opened 75 of those stores in the second quarter. The Phoenix distribution center opened in May 2026. Nine distribution centers had moved to the new warehouse management system, three of them during the quarter.

Trade-duty cases.

• Aluminum pans. The Department of Commerce's preliminary determination in April 2026 affirmed retroactive duties. The company argued against that at a June 2026 hearing, and the final determination was extended to August 31, 2026.
• Paper plates. In July 2026 the Department's preliminary determination found retroactive duties unsupported. Petitioners have asked for that to be reversed, and the final determination is due October 14, 2026.

The company now estimates retroactive exposure at up to about $11 million for aluminum pans and $15 million for paper plates, down from the 10-K estimates of $75 million and $119 million. It does not consider a loss probable.

Guidance. On August 27, 2026, the company raised its fiscal 2026 adjusted EPS outlook. The new range now includes the net benefit of tariff refunds:

For the third-quarter EPS range, the release's headline calls it adjusted EPS and its outlook section calls it diluted EPS. The previous full-year range, set in May 2026, was $6.70–$7.10 and excluded tariff refunds. The initial range, given in March 2026, was $6.50–$6.90.

Subsequent Events

Sources: Form 10-Q for the quarter ended August 1, 2026, accession 0000935703-26-000109 (Notes 3 and 7, Liquidity and Capital Resources); Form 8-K dated September 25, 2026, accession 0000935703-26-000116.

The 10-Q reports no acquisitions, divestitures, new borrowings or litigation outcomes after the quarter ended on August 1, 2026. The post-quarter developments disclosed are:

• Share repurchases. After August 1, 2026, the company bought back another 41,412 shares on the open market for $5.3 million, as of August 25, 2026. There were 187,630,299 shares outstanding on August 25, 2026.
• New trade-duty case. In August 2026 the Department of Commerce opened a new investigation into whether aluminum pans from Malaysia and Indonesia circumvent the 2025 duty orders on Chinese aluminum pans. A ruling against them could make the company's imports subject to those duties. The preliminary determination is scheduled for January 4, 2027, and the company says it cannot predict the outcome.
• Pending final rulings. At the 10-Q filing date, the final determinations in the aluminum pans case (due August 31, 2026) and the paper plates case (due October 14, 2026) were still outstanding. No outcome for either appears in the company's filings through mid-October 2026.
• By-law amendments. On September 24, 2026, the Board amended the by-laws, effective immediately. The changes mainly concern shareholder meeting, special-meeting and advance-notice procedures.