Dollar Tree reported healthy sales growth in the first quarter, but its traffic remained on a decline.

The discount chain lifted its net sales by 7.2 per cent to $5 billion during the quarter ended May 2. Comparable store net sales increased 3.5 per cent, driven by a 4.5 per cent increase in average ticket.

Traffic continued its negative trend over the period with a 1 per cent drop, following a 1.2 per cent decrease in the previous quarter.

GlobaData MD Neil Saunders attributed part of the issue to the fact that the chain’s core customers, mostly in lower-income cohorts, were visiting less because of their pressured finances.  

“The trips they’ve cut out are those of a more discretionary nature, which, on some level, is pleasing because they’re still using Dollar Tree for essentials,” he said.

According to the analyst, Dollar Tree was able to offset the traffic deterioration with higher transaction values, mostly thanks to the continued push to the multi-pricing model.

“What the model has done is provide more options to trade up for those customers who wish to do so. It has also expanded the assortment, which has made Dollar Tree a somewhat more interesting place to shop,” he explained.

The company opened 113 new stores during the quarter, which Saunders said would boost growth through transactions, as well as act as hubs for local delivery. The partnership with DoorDash to offer more than 10,000 products on the platform for fast delivery will also contribute to this.

“While we believe that the competitive environment is much more intense – from other dollar stores, the expansion of players like Aldi, and Walmart and Amazon’s local delivery push – there is still a big opportunity for Dollar Tree to be present in more locations,” he added.

On the bottom line, the company’s operating income soared 23 per cent to $473.3 million.

For the full year, Dollar Tree expects net sales to be in the range of $20.5 billion to $20.7 billion, based on comparable store sales growth of 3-4 per cent.