How Dollar Tree is winning high-income customers despite tariff risks
Dollar Tree is leaning into a shifting customer base and exploring pricing flexibility as it braces for higher costs linked to President Trump’s new round of tariffs.
On Wednesday, the discount retailer reported rising sales and earnings for its namesake brand and said it continues to gain traction with higher-income consumers—a demographic traditionally outside its core base.
CEO Michael Creedon attributed the shift to persistent inflation, which has driven more value-conscious behavior across income groups.
“We’re seeing value-seeking behavior across all income groups,” Creedon told analysts. “Sustained inflation has led to stronger demand from higher-income customers.”
The trend follows a similar pattern observed by Walmart, which has also seen increased footfall from more affluent households amid rising costs of living.
Dollar Tree said it may raise prices on select products to blunt the impact of recently imposed tariffs. In addition to pricing strategies, the company is working with suppliers and adjusting manufacturing to offset added costs.
Creedon said the company has already mitigated 90% of the expected impact from the first round of 10% tariffs on Chinese imports—an estimated $15 million to $20 million monthly hit.
Additional tariffs—including 10% on more Chinese goods and 25% on select products from Mexico and Canada—could raise monthly costs by another $20 million. While Dollar Tree is working to limit the exposure, it did not include the potential effects in its full-year guidance, citing continued policy uncertainty.
In recent years, the company has gradually moved beyond its traditional $1.25 price point. Roughly 2,900 “multi-price” stores now offer products priced as high as $7, giving the retailer more flexibility in its cost management efforts.
The update came as Dollar Tree announced fourth-quarter earnings and a major strategic shift. The company confirmed it will sell off Family Dollar—its underperforming banner—to a consortium of private equity firms for approximately $1 billion.
For the fourth quarter, Dollar Tree posted net sales of $5 billion for continuing operations and a 2% increase in same-store sales. Adjusted earnings per share came in at $2.11.
Looking ahead, the company expects net sales of $18.5 billion to $19.1 billion for fiscal 2025, with projected same-store sales growth of 3% to 5%. Full-year adjusted EPS is forecast between $5.00 and $5.50.
As price-sensitive consumers increasingly include households with higher disposable incomes, the retailer is betting that a broader customer base and greater pricing flexibility will help it weather macroeconomic headwinds, including a volatile trade environment.