Dollar Tree said tariff refunds lifted second-quarter earnings but warned plans to reinvest that money will squeeze profit in the current period.

The discount retailer's soft outlook for the third quarter overshadowed largely positive results in the recent quarter. Shares sank ahead of Thursday's opening bell, before paring back some of the loss to be down 1.5% in morning trading.

Dollar Tree received roughly $383 million in tariff refunds during the recent quarter. Chief Executive Mike Creedon said the company is reinvesting that money back into the business, focusing on areas thought to have the most-lasting impact.

"We are focusing those dollars on targeted pricing strategies, marketing, store operations and store conditions - areas that can benefit our customers today while strengthening the business for the long-term," he said on a call with analysts.

While the investments are expected to ultimately strengthen operations, they will drag on profitability in the near term.

Dollar Tree guided for adjusted earnings of 80 cents to 95 cents a share in the current quarter, inclusive of a 50-cent-a-share impact tied to tariff refund reinvestments. Analysts polled by FactSet were looking for adjusted earnings of $1.40 a share. The company also forecast net sales of $5 billion to $5.1 billion, and for comparable sales to climb 3% to 4%.

The outlook came as Dollar Tree said its value proposition continues to win over budget-conscious shoppers. The company grew its sales across all income cohorts during the latest quarter, Creedon said, adding that the gains skewed toward middle- and higher-income households.

Consumers, especially those from lower-income households, are feeling stressed, and they are increasingly turning to Dollar Tree for everyday essentials.

"It's the combination of a compelling opening price point, deep value, greater choice, trusted brands and new categories that makes the Dollar Tree value proposition so powerful and that brings our customers back to the store," Creedon said.

The comments mirrored those of rival Dollar General, which separately on Thursday posted higher profit and sales in the latest quarter and said shoppers continued to rely on its stores for low-cost goods.

Dollar Tree posted a profit of $514.5 million, or $2.70 a share, for its quarter ended Aug. 1, compared with $188.4 million, or 91 cents a share, a year earlier. Adjusted earnings also came in at $2.70 a share and included a $1.31-a-share benefit tied to tariff refunds. Analysts had expected adjusted earnings of $1.15 a share.

Total revenue climbed 7% to $4.89 billion, just topping Wall Street models for $4.86 billion.

Comparable sales - which account for store openings and closings climbed 3.7%, driven by a 3.3% increase in average ticket and a 0.4% increase in traffic. Analysts had forecast same-store sales to be up 3.2%.

Looking ahead, Dollar Tree said it now expects adjusted earnings of $7.70 to $8.05 a share for the year, up from a prior forecast of $6.70 to $7.10 a share. The new outlook includes a roughly 60-cent-a-share benefit tied to tariff refunds.

Dollar Tree also backed its full-year outlook for net sales of $20.5 billion to $20.7 billion, and for comparable sales to grow 3% to 4%.

Analysts were looking for adjusted earnings of $7.07 a share, sales of $20.65 billion and comparable sales to be up 3.5% for the year.