Why did Dollar Tree stock surge on Thursday? Excellent earnings results
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Dollar Tree (NASDAQ:DLTR
+21.9%) was the top gainer in the S&P on Thursday after exceeding earnings expectations by a sizable margin.

The Virginia-based discount retailer reported big beats on both top and bottom lines, with Q1 GAAP EPS of $2.37 beating analyst consensus by $0.36 and revenue coming in at $6.9B pushing past estimates by $130M. Adding to optimism, comparable store sales for Dollar Tree increased 11.2% while gross profits popped 19.2% from the prior year.

The strong demand and profits were particularly important given the companyâs recent decision to raise some prices to mitigate inflationary pressures on its famously low prices.

âDuring the quarter, the Dollar Tree team successfully completed its conversion to the $1.25 price point, contributing to both sales and margin improvements,â CEO Michael Witynski said. âShoppers are responding favorably as the new, greater value products hit our shelves.â

He added that the company is also expanding its higher price, $3 and $5 offerings with strong consumer response. As such, he offered bullish guidance that largely encouraged the market and added to bullish theses on consumers moving down to dollar stores as inflation and higher fuel prices hit their pockets.

âWe are taking the necessary actions now to position ourselves for accelerated growth in what I view as the most attractive sector in retail, especially in the current economic environment,â Wytinski commented. âValue and convenience are more important than ever to our shoppers and the communities we serve.â
Read more on the broader impact of the results across the âmost attractive sector in retailâ.