Dollar Tree, Inc.

A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I'd now like to turn the call over to your host, Mr. Bob LaFleur, Senior Vice President, Investor Relations for Dollar Tree. Thank you. You may begin.

Good morning, and thank you for joining us today to discuss Dollar Tree's first quarter fiscal 2025 results. With me today are Dollar Tree CEO Mike Creeden and CFO Stuart Glenn-Dinning. Before we begin, I would like to remind everyone that some of the remarks that we will make today about the company's expectations, plans, and future prospects are considered forward-looking statements under the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties, which could cause actual results to differ materially from those contemplated by our forward-looking statements. For information on the risks and uncertainties that could affect our actual results, please see the Risk Factors, Business, and Management Discussion and Analysis of Financial Condition and Results of Operations section in our annual report on Form 10-K, filed on March 26, 2025, our most recent press release in Form 8-K, and other filings with the SEC. We caution against reliance on any forward-looking statements made today and we disclaim any obligation to update any forward-looking statements except as required by law. Also during this call, we will discuss certain non-GAAP financial measures. Reconciliations of these non-GAAP items to the most directly comparable GAAP financial measures are provided in today's earnings release available on the IR section of our website. These non-GAAP measures are not intended to be a substitute for GAAP results. Unless otherwise stated, we will refer to our financial results on a GAAP basis. Additionally, unless otherwise stated, all comparisons discussed today for the first quarter of fiscal 2025 are against the same period a year ago. Please note that a supplemental slide deck outlining selected operating metrics is available on the IR section of our website. Following our prepared remarks, Mike and Stuart will take your questions. Given the number of callers who would like to participate in today's session, we ask that you limit yourself to one question. I'd now like to turn the call over to Mike.

Good morning, everyone. Thank you for joining us today. Let me begin my comments by thanking our associates and leadership team for their efforts in delivering a strong first quarter result. In Q1, we delivered upside across every key metric and results exceeded the outlook we provided. Our expanded assortment strategy is having the intended impact of driving incremental traffic, ticket, and comp. We also continue to grow the Dollar Tree footprint, recently celebrating the opening of our 9,000 store located in Plano, Texas. As excited as we are to reach this milestone, we're just as excited about the growth runway ahead of us. Turning now to our Q1 results, we are pleased with our performance. Amid increasing volatility, we remain focused on the things that are within our control and our results demonstrate just how much progress our teams have made in areas like rolling out our expanded assortment, improving store conditions, and achieving strong sell-through of seasonal merchandise. Q1 comps and net sales both exceeded the high end of our outlook range, driven by a strong Valentine's Day and Easter. Additionally, the revenue contribution from non-comp stores was up nearly 90% year over year, led by ongoing strength in the former 99 cents only portfolio. Adjusted EPS from continuing operations came in a penny above our outlook range at $1.26, reflecting strong sales and ongoing focus in expense management. Dollar Tree's 5.4% comp was nicely balanced, with traffic up 2.5%, and ticket up 2.8%. Category performance was strong across the board with consumables comp up 6.4% and discretionary comp up 4.6%, our highest discretionary comp since Q4 of 2022. We always start with our customer and today our customers need us now more than ever. Each week, more shoppers across a diverse range of economic and demographic backgrounds are responding to the appeal of Dollar Tree's unique value, convenience, and discovery proposition. Our gains in dollar and unit market share accelerated in Q1. In fact, we gained twice as much unit share in Q1 as we did in Q4. These gains are driven by strong trends in immediate consumption purchases like candy, snacks, and beverages, as well as key discretionary categories. New customers and increasing trip frequency are both driving share gains. We added 2.6 million new customers in Q1, and the number of customers who visit a Dollar Tree store three times a month or more increased by 9%. Trade-in trends remain strong as we attract customers from other retail channels. In recent quarters, higher-income customers have been a meaningful growth driver for us. In Q1, we had measurable sales improvement across all income levels, with the most growth coming from our higher income customers. In particular, we saw a meaningful traffic increase from customers with household incomes of more than $100,000, demonstrating Dollar Tree's broad appeal. Dollar Tree is resonating with its customers. In the current environment, our low prices and smaller pack sizes are perfect for families trying to manage a tight household budget. And our expanded assortment is attractive to all customers across every income level. We believe that value, convenience, and discovery is exactly the right formula for all of our customers. Q1 marked the one-year anniversary of our multi-price 3.0 launch. Demonstrating the broader appeal of our expanded assortment, the 3.0 portfolio continues to outperform our other store formats by providing a nice boost to traffic, ticket, comp, and discretionary mix. During the quarter, we completed approximately 500 3.0 conversions, and we are still on track to have about half the store base converted by year-end. Now let me shift to tariffs. As I detailed for you last quarter, our merchant and operations teams have spent the past several years developing contingency plans to address a wide range of potential disruptions to global trade, including tariffs. As a result of these efforts, we have multiple tools in place to address any challenges. As a reminder, the five levers we have available to address cost inflation, including tariffs, are negotiating with our suppliers, respeccing products, moving country of origin, dropping non-economic items, and leveraging our expanded multi-price capabilities. Today, we are actively engaged on multiple fronts to mitigate the impact of inflationary cost pressures, including tariffs. As we discussed last quarter, our teams effectively used these levers to offset 90 percent of the first round of tariffs, the initial 10 percent announced in February. And we are continuing to employ these levers to address the latest round. But the tariff landscape is highly fluid and changing week to week, so we are focused on agility and on improving that agility. As always, our goal is to use our significant scale combined with the uniqueness and flexibility of our assortment to secure the lowest landed cost on the products we source and provide our customers with compelling products at a great relative value. Since our founding, we have been committed to delivering great value at low prices, and that mission is just as central to our business today as it was when Macon Brock, Doug Perry, and Ray Compton opened the first dollar-only store back in 1986. To put things in perspective, the average unit retail or AUR in our first dollar store was a dollar. Today, almost 40 years later, our AUR is around $1.35. and 85% of the items in the store are still priced under $2. No other retailer has been able to sustain a value proposition like that for as long as we have. What has made us successful over the years is our ability to remain agile in how we deliver value. We are constantly adapting to the evolving needs of our customers, not just by what we offer, but by how we offer it. The evolution of our business model towards multi-price has added a new dimension to our agility. Multi-price allows us to expand our product assortment to give customers access to a wider variety of items at a wider variety of value-centered price points. This way, our offerings remain attractive and relevant under a wide range of macro, inflationary, and tariff scenarios. And as the success of our 3.0 stores suggests, our customers are responding positively. As we build on the ability to meet our customers' needs and deliver great value, we will continue to scale this model. This enables us to respond to our customers' needs, strengthen our value proposition, and support profitable growth over the long term. Given the volatility of today's operating environment, it is challenging to predict with precision the near-term performance of the business in Q2, especially regarding tariff and other cost mitigation efforts. Stepping back and taking a full-year view, we believe that by successfully deploying our five levers, we will be able to mitigate most, if not all, of the potential earnings impact from higher tariffs, assuming the current levels remain in place. To this end, we are updating our full-year adjusted EPS outlook range to 515 to 565, which is essentially the outlook we provided last quarter adjusted for our year-to-date share repurchases. Stuart will share more details on our outlook shortly. Before I close, I wanted to update you on the Family Dollar sale. We have received U.S. regulatory approval for the transaction, and we remain on track for an early summer close. As we work through the final logistics of separating the two companies, our leadership team remains focused on growing and strengthening the core Dollar Tree business. As I detailed last quarter, selling Family Dollar sharpens our operational focus, strengthens our balance sheet, and is highly cash flow accretive. In closing, we're proud of what we accomplished this quarter, and we're even more excited about what lies ahead. Our strong performance in Q1 underscores the progress we've made against our strategic priorities, and it is a clear signal that our customers are responding positively to that progress. From store operations to merchandising, from sourcing to in-store execution, every part of our business is becoming more agile, better aligned, and more resilient. The Dollar Tree model is uniquely positioned to succeed in times like these. Thanks to the hard work and commitment of our teams, I'm confident in our ability to navigate whatever near-term challenges we may face. With that, I'll turn the call over to Stuart.