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Why Dollar Tree Stock Rose 23% in May

By Demitri Kalogeropoulos – Jun 8, 2020 at 8:24AM

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First-quarter earnings rose as shoppers stocked up on supplies during the COVID-19 pandemic lockdown.

What happened

Dollar Tree (DLTR 0.28%) shareholders dramatically outperformed the stock market last month. The stock jumped 23% in May compared to a 4.5% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

The increase put the value-focused retailer back in positive territory for the year, up 4% so far in 2020.

A woman holding shopping bags.

Image source: Getty Images.

So what

Investors celebrated Dollar Tree's first-quarter earnings results, which on May 28 revealed strong sales growth through the maximum social distancing efforts around COVID-19 in March and April. The gains were mixed, though, with the Dollar Tree brand shrinking slightly even as the Family Dollar franchise spiked 16%.

Now what

The consumer staples giant's faster sales growth will inevitably slow back down as social distancing efforts are relaxed, but Dollar Tree has demonstrated that it is a trusted source for home supplies ranging from groceries to toys and games. The next few quarterly reports will show whether those market share gains will persist even after the COVID-19 threat fades.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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