Dive Brief:
- Dollar Tree has contingency plans in place to combat several potential tariff scenarios, CEO Michael Creedon told analysts during a March 26 earnings call.
- The retailer is currently negotiating supplier cost concessions, changing product specifications, dropping non-economical items, shifting country of origin and “exercising the flexibility multi-price gives us,” he said.
- “We intend to remain flexible and nimble, focusing our efforts on sourcing products via channels that deliver the lowest landed cost to us in order to maintain value continuity for our customers,” the CEO said.
Dive Insight:
Dollar Tree had been working to curb the financial impact of tariffs in the leadup to President Donald Trump’s April 2 reciprocal tariff announcement.
Based on its expected 2025 imports, Dollar Tree assumed the net impact of the Trump administration’s first 10% China tariff hike announced in February — prior to any mitigation efforts — to be between $15 million and $20 million per month.
As of the March 26 earnings call, Dollar Tree’s tariff mitigation strategy has helped offset more than 90% of the incremental cost of the Trump administration’s first round of tariffs levied in February.
Regarding the second 10% tariff on goods from China enacted in March, as well as the 25% tariff on imports from Canada and Mexico, Creedon said that the retailer’s expected pre-mitigation exposure is roughly $20 million per month. However, those comments were made prior to Trump’s April 2 announcement.
Since then, the Trump administration has paused country-specific tariffs for 90 days, although most countries are still subject to a 10% baseline tariff. The U.S. also upped the tariff rate on imports from China to 125%.
Dollar Tree is pulling tariff mitigation levers it used during Trump’s first administration. In 2018 and 2019, Dollar Tree negotiated lower costs with its suppliers to combat a majority of the potential tariff impact, Creedon told analysts in December 2024.
“Back then, the choices were they could change some of the specs on the product, they could negotiate furiously with our suppliers or they can eliminate the product altogether. They still have all three of those levers to pull,” the CEO said.
He added that those three options were currently still at the retailer’s disposal, and that Dollar Tree has “detailed plans in place” to shift its supply sources for most of its products.
“Based on our scale and our past history of navigating through similar challenges, we believe there is a wide range of potential actions that we can take to help mitigate additional tariffs if and when they materialize,” the CEO said at the time.
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