Key Moments
- Jefferies upgraded Dollar Tree to Hold from Underperform as traffic trends showed clear signs of improvement.
- Second-quarter rolling foot traffic reached +1.4%, up from -0.8% in the first quarter, with July traffic at +4.5%.
- Jefferies lifted its second-quarter EPS estimate to $1.15 from $1.00, above the Street’s $1.12 forecast.
Upgrade Driven by Better Traffic and Simplified Operations
Investing.com — Jefferies raised its rating on Dollar Tree (NASDAQ:DLTR) to Hold from Underperform, citing a clear improvement in traffic patterns and reduced risk of additional near-term market share losses.
Analysts led by Corey Tarlowe said Dollar Tree’s operations have reverted to being “simple and straightforward.” Their earlier downgrade had focused on challenges stemming from the chain’s multi-price rollout, heightened competitive intensity, and worries that ticket-led growth would weigh on both store traffic and margins. The analysts noted that although some of those concerns did materialize, comparable sales are now solid and traffic indicators are turning higher.
Following the upgrade, shares of the discount retailer rose about 1% in U.S. premarket trading.
Traffic Metrics Show Clear Inflection
Jefferies highlighted that foot traffic is recovering even against difficult year-over-year comparisons. The firm said second-quarter traffic growth was the strongest in nine trailing quarters, with trends likely having bottomed in the first quarter.
According to Jefferies, its data shows Dollar Tree’s second-quarter rolling foot traffic at +1.4%, improving from -0.8% in the first quarter, while July foot traffic stood at +4.5%.
| Metric | 1Q | 2Q (Rolling) | July |
|---|---|---|---|
| Foot traffic change | -0.8% | +1.4% | +4.5% |
Revised Comp and Earnings Outlook
The brokerage increased its second-quarter comparable sales forecast for Dollar Tree to 3.4% from 2.5%. Drawing on Placer’s rolling three-month visits data, Jefferies’ models suggest a traffic comp of roughly 0.8%, implying a ticket comp of around 2.6% based on trailing four-quarter ticket stacks.
The new 3.4% comp estimate sits modestly above Street expectations of 3.1% and is near the upper end of management’s guidance range of 2.5%-3.5%.
| Estimate / Guidance | Previous | Revised | Street / Guidance |
|---|---|---|---|
| 2Q comp sales | 2.5% | 3.4% | Street: 3.1%; Guidance: 2.5%-3.5% |
| 2Q EPS | $1.00 | $1.15 | Street: $1.12 |
| Implied traffic comp | – | ~0.8% | – |
| Implied ticket comp | – | ~2.6% | – |
Jefferies also raised its second-quarter earnings-per-share projection to $1.15 from $1.00, placing it above the Street’s $1.12 estimate.
Competitive Landscape and Remaining Risks
The analysts cautioned that competitive pressures have not fully abated. They acknowledged that management has made progress in enhancing in-store signage and pricing transparency, but warned that execution risk persists in lifting all 9,000 locations to the company’s “G.O.L.D. Standard.”
Jefferies also pointed to a potential minor ticket headwind in the third quarter tied to a 40th-anniversary $1 rollout on select items. However, they suggested this initiative could provide a near-term lift to store traffic.
The report further noted that Target has been regaining broader retail market share. Even so, the analysts said they “do not expect further notable share loss from DLTR NT as pricing initiatives take hold and traffic returns.”





