Dollar Tree, Inc.

Greetings and welcome to the Dollar Tree Q4 2025 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star 1 on your telephone keypad, and we ask you to ask one question and one follow-up, then return to the queue. As a reminder, this conference is being recorded. If anyone should require operator assistance, please press star 0 on your telephone keypad. It's now my pleasure to turn the call over to Daniel Del Rosario, Senior Vice President, Investor Relations and Treasurer. Daniel, please go ahead.

Good morning and thank you for joining us to discuss Dollar Tree's fourth quarter fiscal 2025 results. With me today are Dollar Tree's CEO, Mike Creeden, and CFO, Stuart Glendening. 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 should 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's Discussion and Analysis of Financial Condition and Results of Operations section in our annual report on Form 10-K, filed on March 16, 2026, our most recent press release, and Form 8K 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 discussions today refer to our results from continuing operations and all comparisons discussed today for the fourth 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. Please limit yourself to one question and one follow-up question. And with that, I'll turn the call over to Mike.

Thanks, Daniel. And before I begin, I want to welcome you in your new role and congratulate you. We're excited to have you stepping into this next chapter with us. I look forward to working closely together as we continue sharpening our execution and communicating our story with clarity and discipline. Morning, everyone. I'd like to use my time today to step back and frame what this quarter represents. More importantly, what it tells us about the underlying trajectory of the Dollar Tree business. At Investor Day, we laid out a clear roadmap for Dollar Tree, expanding and modernizing our assortment through multi-price, strengthening operational execution, and managing costs with agility while driving disciplined capital allocation. The fourth quarter is an important proof point that those strategic pillars are translating into measurable results. We delivered 9% revenue growth in the fourth quarter with a comp of 5%. The comp performance reflected continued ticket growth, an expected decline in traffic, strong seasonal execution, and high discretionary engagement with the customer. As we exit fiscal 2025, we're doing so from a stronger earning space than we contemplated at Investor Day, reflecting the operational progress made in the back half of the year and positive customer response to our expanded assortment and value offerings. The fourth quarter included approximately 40 basis points of comp headwind from two winter storm events late in January that led to widespread store closures. We don't typically call out weather, as those impacts tend to normalize over time, but the severity of these storms makes it appropriate to address. At the peak of the disruptions, nearly half of our store fleet was impacted by closures. the team executed our storm playbook effectively, prioritizing safety, maintaining operational control, and reopening stores quickly for the communities that we serve. Despite the headwind from the January storms, comparable sales were still at the midpoint of our outlook range, supported by improved mix and strong seasonal demand. Year-end holiday performance was especially strong, reinforcing customer engagement. Importantly, these results reflect more than just quarterly momentum. They demonstrate the continued progress we are making across the business. In 2025, we made strong progress on our transformation initiatives. We completed the sale of Family Dollar, continued to test, learn, and sharpen our multi-price and merchandising strategy, modernized key operational capabilities, and laid the groundwork for sustained execution against our long-term algorithm. What we built this year is a stronger foundation for the next phase of growth. We are now, once again, a focused, single-banner enterprise, Dollar Tree. We successfully navigated unprecedented tariff volatility and demonstrated the flexibility we've gained for responding to future macroeconomic factors via our multi-price assortment. We scaled multi-price with discipline, expanding assortment breadth, increasing sales productivity in converted stores, and broadening our addressable market while preserving price leadership. We demonstrated measurable progress against strengthening our store standards. That's meaningful change for a 9,000-plus store system and validates our strategy. Reinforcing that disciplined execution, clear priorities, and operational focus are translating into stronger fundamentals and a durable long-term growth plan. Over the past three months, we've seen an acceleration in Dollar Tree household growth. Dollar Tree U.S. households reached a record 102 million, adding 6.5 million net new households in Q4, which represents a meaningful acceleration versus Q3. The growth in households continues to be broad-based and accelerated sequentially. As we shared with you at Investor Day, increasing trip frequency is a significant opportunity, where even modest gains in annual visits translate into meaningful incremental sales. Taken together, the data shows multi-price and assortment expansion are not just driving spend, they are expanding Dollar Tree's addressable markets. Let's turn now to comp. The 5% comp in the quarter was ticket-driven, with average unit retail increasing to approximately $1.51 versus $1.34 last year. Mix was a key driver in the quarter. Discretionary categories outperformed consumables, with multi-price driving outsized strength in seasonal, party, and toys. Multi-price was also a tailwind to our Christmas performance, driving strong engagement across seasonal and discretionary categories. Expanded price bands and a more relevant assortment increased category breadth and gifting choice, driving basket expansion. Stores with more mature multi-price assortments delivered stronger seasonal demand and higher average tickets, reinforcing the incremental nature of the strategy. We see discretionary outperformance as an indicator of customer receptivity to expanded value, with shoppers gravitating toward broader assortments and higher-value options. As we have underscored in the past, Dollar Tree maintains laser focus on real-time, quantitative benchmarking of the value in our stores versus the competition. On an aggregate basis, our relative value proposition was even stronger as we exited 2025 than when we entered and versus our historical average. This is of course, after pricing actions in response to tariffs and increased multi-price penetration. I'd also like to highlight that on average, the relative value of our multi-price offerings is even higher than that of our entry price skews. Gross margin performance continues to improve, supported by favorable mix, freight moderation, and disciplined mark-on management, even as we absorbed higher markdowns and continue to manage tariff volatility. Robust comp and margin performance, coupled with an incredible and expanding value proposition for our customers, reflect the strength and durability of Dollar Tree's fundamentals. Let me turn to Multiprice, which is a core pillar of our growth strategy and central to how we are expanding the business. In Q4, Multiprice represented approximately 16% of total sales. Over the course of the year, we rolled out roughly 2,400 additional in-line 3.0 Multiprice stores, bringing the total to approximately 5,300 locations. While the distinction between our different store formats is becoming less pronounced as multi-price elements are integrated across all stores, our inline multi-price stores continue to deliver meaningfully higher sales productivity than legacy formats, reinforcing the structural productivity benefits of the model as we scale. By maintaining $1.25 leadership and introducing more price points, we've increased flexibility, improved relevance, and deepened basket potential through complimentary new offerings delivering thrill of the hunt wow value. Approximately 85% of our opening price point assortment is $2 and below. And more than 80% of the assortment is unique to Dollar Tree, reinforcing the differentiated, discovery-driven nature of our model. We remain in the early innings of Dollar Tree's multi-price evolution. The results we have achieved to date give us building excitement on the opportunity ahead. I'd like to take a moment to discuss traffic trends at Dollar Tree. Traffic declined in the quarter in line with our expectations. I want to zoom out now and share how we're currently thinking about traffic more broadly. As we shared at Investor Day, everything we're doing is deliberate, from how we're modernizing pricing to how we're strengthening execution across the fleet. With that context, let me put our traffic trends in perspective. We have successfully worked through the restickering process. It is now largely behind us. That process was a system-wide reset, new signage, improved price clarity, and assortment updates designed to modernize the shopping experience. We've only adjusted pricing twice in our history. First, breaking the dollar in 2022, and second, targeted price actions in response to tariffs in 2025. Historically, with pricing resets at Dollar Tree, while overall comp sales remain robust, there is a temporary mix shift in the same store sales composition between traffic and ticket. What we're seeing today is directionally consistent with that pattern. That being said, as we look at the data, we see a traffic trend that is above prior reset levels, outperforming our historical experience. Importantly, we were more strategic and deliberate with our assortment during our current price adjustment cycle. As Stuart will outline in more detail shortly, our 2026 outlook reflects an expectation for a more balanced contribution from traffic and ticket. In fact, we saw sequentially improving traffic in Q4, and we're pleased with our quarter-to-date trend. Larger picture, what matters most is how customers are behaving during a pricing transition. If engagement were deteriorating, we would expect to see pressure first in discretionary and impulse categories. Instead, in Q4, discretionary outperformed, seasonal was strong, and multi-price adoption increased. That is the profile of a customer who is engaging and responding to expanded assortment and incremental value. Let me shift to execution. This is where we've made some of the most important progress. Operational metrics are improving across the fleet. Since mid-year 2025, we've seen improvement in store-level performance indicators. For example, on a net basis, more than one-third of our stores have improved against our internal operating standards, driving greater consistency across the fleet. Importantly, stores that perform at the highest levels across key operational indicators are outperforming the fleet with higher levels of comp and profitability. This reinforces a simple principle. When store leadership is stable, schedules are optimized, shelves are stocked, and processes are consistent, stores perform better. We've made tangible progress filling store manager vacancies, reducing turnover, and minimizing early closes and late openings. Retail is local, and it's won store by store. That strengthening foundation extends beyond the four walls of the store and into our broader supply chain and inventory discipline, which I'll touch on next. The foundation of our business is getting stronger, and that improvement is particularly visible in our supply chain. We're raising the bar across the organization. and we're seeing strong delivery from our supply chain team as service levels, in-stock metrics, and inventory discipline continue to improve. As we shared in Investor Day, those gains are driving greater operating efficiency, including higher throughput per distribution center and improved shipping productivity, and giving us confidence in our expectations. We also navigated meaningful cost volatility this year. tariff expense increased substantially year over year. As we've discussed, we continue to actively deploy the five mitigation levers we've historically used to manage cost headwinds, including supplier negotiations, product reengineering, country of origin shifts, assortment adjustments, and targeted pricing actions, all to maintain strong profitability while preserving value for our customers. Gross margin expanded despite this volatile tariff backdrop. We managed corporate expenses with discipline, are right-sizing the organization post-separation, improved free cash flow, and returned significant capital to shareholders. This is a structurally stronger enterprise than it was 12 months ago. When I step back, what I see is a resilient, high-quality business that has navigated through a period of unprecedented change while advancing a broad set of strategic initiatives. At Investor Day, we laid out a clear set of assumptions and a path forward. And in the back half of the year, we outperformed the earnings expectations embedded in that framework. That performance reinforces both the resiliency of the model and the early progress we're making against the plan we shared with you. We're exiting the year with an expanded, more relevant assortment driven by disciplined multi-price execution, a stronger customer connection and accelerating household growth, improved store operations and greater consistency across the fleet, and agile cost management in a volatile environment. supported by supply chain excellence and disciplined financial management. That combination positions us well going forward. In summary, Dollar Tree today is simpler, more focused, and structurally stronger than it was a year ago. We're confident in the durability of this model and in the direction we are heading. With that, I'll turn it over to Stuart to walk through the financial details.