Two Discounters Raised Full-Year Guidance on Tariff Refunds Neither Company Adjusted Out

by Clara Borresen · September 2, 2026

Senior Earnings Analyst, Earnings Dispatch

Dollar Tree and Dollar General both reported second-quarter results on August 27 and both raised full-year earnings guidance. In both cases a chunk of the improvement came from tariff refunds, and in neither case did the company treat those refunds as a non-recurring item to be stripped out of its headline earnings figure. The result is two guidance raises that look different once the refund is separated from the operating business.

Start with Dollar Tree, because its disclosure is the more unusual of the two. The company reported second-quarter net sales from continuing operations of $4.89bn, up 7.0%, with comparable store sales up 3.7% against a 6.5% comparison a year earlier. GAAP diluted EPS from continuing operations was $2.70 against $0.75, an increase of 260.0%. Adjusted diluted EPS was also $2.70, against $0.77 a year earlier, an increase of 250.6%.

Those two numbers being identical is the point. In the year-ago quarter Dollar Tree's GAAP and adjusted EPS differed by two cents. This quarter they did not differ at all, which means the tariff refund benefit the company itself quantifies at $1.31 a share is fully inside the adjusted figure as well as the GAAP one. An investor who reads only the adjusted line is not screened from the refund.

What the $1.31 is made of

Dollar Tree set out the components in its release. Refunds of tariffs levied under the International Emergency Economic Powers Act totalled $383m, of which $369m ran through cost of sales and $14m through other income. Against that the company recorded $22m of reinvestment expense in cost of sales, $15m in selling, general and administrative expense, and $13m of certain duties. The arithmetic nets to $333m pre-tax. Spread across the 190.9m diluted shares outstanding in the quarter, that is roughly $1.74 a share before tax, which is consistent with the $1.31 after-tax figure the company reports.

The refund is also most of the margin story. Dollar Tree's gross margin reached 42.9%, an expansion of 850 basis points, and operating margin reached 14.1%, an expansion of 900 basis points, of which the company attributes approximately 650 basis points to the tariff refunds. The $369m of refunds booked in cost of sales equals 7.5 percentage points of the $4.89bn sales base on its own, or 7.1 points after the $22m of reinvestment expense also booked there. Either way, most of the 8.5-point gross margin expansion sits in that one line item rather than in trading.

Backing the refund out is straightforward for the quarter. Second-quarter EPS excluding the $1.31 benefit would be $1.39, against a $0.77 adjusted comparison a year earlier, or growth of 80.5% rather than the reported 250.6%. Both are large numbers. They are not the same number, and the gap between them is the difference between an operating result and a customs outcome.

The guidance raises are not alike

Dollar Tree raised its full-year fiscal 2026 adjusted diluted EPS outlook to a range of $7.70 to $8.05, a range the release says includes an approximate $0.60 benefit from the net impact of tariff refunds. On that basis the underlying range excluding the refund is $7.10 to $7.45. The refund equals 7.6% of the $7.875 midpoint. The release announces an increase only at the earnings line: it restates full-year net sales from continuing operations of $20.5bn to $20.7bn on comparable store sales growth of 3% to 4% without describing either range as raised, and the Finimize digest cited below reports that both were left unchanged. Dollar Tree's own release does not print the prior ranges, so that comparison is the digest's rather than the company's.

Dollar General took a different shape. It reported net sales of $11.3bn, up 5.2%, with same-store sales up 3.5% split between 2.0% customer traffic growth and a 1.5% increase in average transaction. Gross profit reached 32.6% of net sales, up 127 basis points, of which approximately 81 basis points came from tariff refunds after reinvestments, according to the company's release. That is 63.8% of the margin expansion. Operating profit rose 29.2% to $769.2m, and GAAP diluted EPS rose 33.3% to $2.48, including approximately $0.25 from the refunds.

Dollar General reports on a GAAP basis and did not publish an adjusted EPS alongside it, so there is no second measure from which the refund has been removed. Excluding the $0.25, second-quarter EPS would be $2.23 against the $1.86 the company reported a year earlier, or growth of about 19.9% rather than 33.3%.

Where Dollar General differs from Dollar Tree is in what else it moved. It raised its full-year net sales growth range to 4.0% to 4.3% from 3.7% to 4.2%, and its same-store sales range to 2.5% to 2.9% from 2.2% to 2.7%, alongside lifting its GAAP diluted EPS range to $7.80 to $8.00 from $7.20 to $7.45. The EPS midpoint moved by $0.575, of which the $0.25 second-quarter refund benefit represents 43.5%. The balance of the raise is attributable to something other than the customs refund, and the accompanying sales and comp raises are consistent with that. Dollar General also said it does not anticipate a material impact from tariff refunds in the second half of fiscal 2026, which places the benefit in the quarter just reported rather than in the guidance being raised.

There is a warning inside Dollar Tree's own third-quarter outlook. The company guided third-quarter net sales to $5.0bn to $5.1bn with comparable sales of 3.0% to 4.0%, and diluted EPS of $0.80 to $0.95, stating that this range carries a $0.50 impact related to tariff refund reinvestments. In other words the refund flatters the second quarter and the spending of it weighs on the third, which is a sequence that is visible only if the two quarters are read together.

A Finimize summary published August 27 described the refunds at both companies as one-time, and argued that steady comparable sales and customer traffic are what usually determine whether higher earnings persist. That framing is the digest's. Dollar Tree's release does not label the refunds one-time or non-recurring anywhere in the passages reviewed for this article; Dollar General does not use the word either, though its statement that it expects no material second-half impact points the same way. What both companies did do is leave the benefit inside their headline numbers, which puts the work of separating it on the reader.

Two smaller mechanical points at Dollar Tree are worth logging. It ended the quarter with 9,436 stores across the United States and Canada after opening 75 and closing 21, with roughly 6,600 now converted to its multi-price format. And it repurchased $605m of stock in the quarter and $1.2bn year to date, alongside a fall in the diluted share count to 190.9m from 207.8m a year earlier, a decline of 8.1% that raises per-share figures independently of both operations and tariffs. Nothing in this article is a recommendation to buy or sell any security.