Dollar Tree’s shares advanced about 1% in premarket trading after Jefferies upgraded the discount retailer to Hold from Underperform, citing improving store traffic and a resilient pricing strategy.
The upgrade follows data showing Dollar Tree’s rolling three-month foot traffic rose 1.4% in the second quarter, reversing a 0.8% decline in the first quarter and marking the strongest growth in nine trailing quarters. July traffic further accelerated to a 4.5% increase, according to Placer’s visits data. Jefferies raised its second-quarter comparable-store sales estimate to 3.4% from 2.5%, exceeding the Street’s 3.1% forecast and aligning with the upper end of management’s 2.5%–3.5% guidance range.
Analyst Corey Tarlowe also lifted the second-quarter earnings-per-share estimate to $1.15 from $1.00, above the consensus $1.12. The firm’s upgrade reflects confidence that Dollar Tree’s pricing initiatives are stabilizing traffic and mitigating prior concerns over operational complexity from its multi-price rollout and competitive pressures.
Jefferies had previously downgraded Dollar Tree over risks tied to the rollout of higher price points across its 9,000 stores, competitive headwinds from peers such as Target, and expectations that ticket-driven growth could weigh on traffic and margins. While the firm acknowledges remaining execution risks—including the ongoing transition to the company’s "G.O.L.D. Standard" store model—it now expects minimal near-term share loss as pricing measures take hold. A potential minor ticket headwind in the third quarter is noted due to a 40th-anniversary $1 promotion on select items, though this could provide a short-term traffic boost.
