Dollar General is shaking off tariff fears and winning over higher-income consumers
The Tennessee-based retailer beat quarterly expectations for revenue and earnings. The company said it now anticipates net sales will grow about 3.7% to 4.7%, compared to its previous expectation of about 3.4% to 4.4%. It expects diluted earnings per share to range from $5.20 to $5.80, compared to its prior outlook of approximately $5.10 to $5.80. Dollar General anticipates same-store sales will increase 1.5% to 2.5%, higher than its previous guidance of about 1.2% to 2.2%.
Here's how the retailer did for the fiscal first quarter compared with Wall Street's estimates, according to a survey of analysts by LSEG:
Earnings per share: $1.78 vs. $1.48 expected
Revenue: $10.44 billion vs. $10.31 expected
In the three-month period that ended May 2, Dollar General reported net income of $391.93 million, or $1.78 per share, compared with $363.32 million, or $1.65, in the year-ago quarter.
As of Tuesday's close, shares of Dollar General have risen about 48% so far this year. That far exceeds the roughly 1% gains of the S&P 500 during the same period. Shares of the retailer closed at $112.57 on Tuesday, bringing Dollar General's market value to $24.76 billion.
Dollar General's first-quarter results — and its stock performance — stand out in a retail industry that is already taking a hit from President Donald Trump's tariffs. Companies including Best Buy, Macy's and Abercrombie & Fitch have cut their profit outlooks due to tariffs.
On an earnings call Tuesday, Dollar General CEO Todd Vasos said the company has worked to reduce its exposure to China — and limit price hikes for shoppers. He said the retailer has worked with vendors to cut costs, moved manufacturing to other countries and made changes to its products or swapped them out for other merchandise.
He said direct imports make up about a mid- to high single-digit percentage of its overall purchases and indirect imports are about double that.
'While the tariff landscape remains dynamic and uncertain, we expect tariffs to result in some price increases as a last resort, though, we intend to work to minimize them as much as possible,' he said.
CFO Kelly Dilts said on the company's earnings call that full-year guidance assumes that Dollar General will be able to offset 'a significant portion of the anticipated tariff impact on our gross margin, but also allows for some incremental pressure on consumer spending.'
Customer traffic dipped by 0.3% in the first quarter compared to the year-ago period, but shoppers spent more when they visited. The average transaction amount rose 2.7%, as sales in the food, seasonal, home and apparel categories all grew.
Vasos added tariffs have also increased U.S. consumers' desire to find deep discounts. Vasos said the company's first-quarter results reflect Dollar General's gains from 'customers across multiple income bands seeking value.'
He said store traffic and the company's market research indicates that more middle- and higher-income customers have come to its stores more frequently and spent more when they visited.
'We are pleased to see this growth with a wide range of customers and are excited about our ongoing opportunity to grow [market] share with them,' he said.
Those gains have helped as Dollar General's core customer 'remains financially constrained,' Vasos said. According to a survey by the company, he said 25% of customers reported having less income than they did a year ago and almost 60% of core customers said 'they felt the need to sacrifice on necessities in the coming year.'
Dollar General's sales largely come from U.S. consumers who are on a tight budget. About 60% of the retailer's sales come from households with an annual income of less than $30,000 per year, Vasos said last fall at a Goldman Sachs' retail conference.
In addition to wooing value-conscious shoppers, Dollar General has tried to tackle company-specific problems that drew government scrutiny and tested customer loyalty. The discounter, which has more than 20,000 stores across the country, has paid steep fines to the Labor Department for workplace safety violations due to blocked fire exits and dangerous levels of clutter.
Vasos highlighted some of the ways that Dollar General has tried to improve the customer experience. Among them, it's worked to reduce employee turnover, and it took about 1,000 individual items off its shelves so it can keep top-selling items in stock, he said.
Dollar General has launched its own home delivery service, which is now available at more than 3,000 stores. Its deliveries through DoorDash have grown, too, with sales up more than 50% year over year in the quarter.
Dollar General has also bulked up its merchandise categories outside of the food and snack aisles, adding more discretionary items like seasonal decor and home items.
Vasos said sales in those categories have also gotten a boost from middle- and higher-income customers shopping its stores.
Its newer store chain, Popshelf, sells mostly discretionary items and caters to consumers with higher household incomes than Dollar General's typical shoppers. Vasos did not share a specific metric for the chain, but said Popshelf's same-store sales delivered strong growth in the quarter. The company recently changed the store layout to emphasize toys, beauty and party candy.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
28 minutes ago
- Reuters
Global markets face shaky week ahead as US pressure mounts on Ukraine
LONDON, Aug 17 (Reuters) - Defence stocks and energy markets are likely to be in focus this week, as European leaders rushed to back Ukraine in talks with U.S. President Donald Trump that may pressure Kyiv to accept a peace deal favouring Russia. Investors are watching for signs that the U.S. may move closer to Russia in a bid to exploit vast, untapped Arctic energy resources, in a major geopolitical shift that piles pressure on Europe to rapidly boost defence spending. Trump and Russian President Vladimir Putin ended their weekend summit in Alaska without securing a Ukraine ceasefire agreement, with the U.S. President then saying he now wanted a rapid peace deal that Kyiv should accept. Ukrainian President Volodymyr Zelenskiy is travelling to Washington on Monday for talks that leaders of nations including Germany, the UK and France will now join. "Trump seems inclined to reduce or even end US support for Ukraine. Putin got him interested in business deals," Berenberg Chief Economist Holger Schmieding said in a note to clients. "As a result, the US may lift its sanctions on Russia and invest in Russia instead," he added. "Europe will have to spend a lot more for its own defence." Investors have bet on that outcome since February 2022, driving a supercharged rally in European aerospace and defence stocks (.SXPARO), opens new tab with gains of over 600% for Leonardo ( opens new tab and 1,500% for Germany's Rheinmetall ( opens new tab. The euro has rallied 13% against the dollar this year and traded at about $1.17 on Friday. Bank of America strategist Michael Hartnett highlighted the potential for U.S.-Russia Arctic drilling projects to exploit 15% of the world's undiscovered oil and 30% of the world's undiscovered natural gas, resulting in a deep energy bear market. Brent crude, which dropped more than 1% to near $66 a barrel, on Friday, was still priced for a Ukraine peace deal, Hartnett cautioned, while Trump wanted lower energy prices for U.S. consumers . Ukraine's government bonds - key mood indicators - rallied when news of the summit emerged earlier this month but have stalled at a still-distressed 55 cents per dollar. "I would think they will be a bit weaker following the recent strength as the mood seems to favour Russia following Friday's summit," Aegon Asset Management head of emerging market debt Jeff Grills said.
Daily Mail
an hour ago
- Daily Mail
Historic red state town with Victorian charm faces population boom
Once celebrated for its historic Victorian architecture and small-town charm, Clarksville, Tennessee , is now grappling with the growing pains of being one of the fastest-expanding cities in America. The population of the military town that sits close to Fort Campbell on the border with Kentucky has soared past 186,000. This is a jump of nearly 20,000 in just four years - but the housing market hasn't kept pace, driving prices sky-high and leaving many locals struggling to find a place to live. A new housing study warns that the shortage spans both rental and for-sale properties, with limited supply and a lack of variety in available homes. The squeeze is forcing some residents to spend a disproportionate share of their income on housing, cutting into local spending and threatening long-term economic stability. City officials acknowledge the problem, but the scale of Clarksville's growth has left them scrambling to balance development with infrastructure needs while preserving the historic charm that draws people here in the first place. Council member Deanna McLaughlin called the situation 'urgent', pointing to a severe five-year housing gap of more than 15,000 units - including 8,595 for-sale homes and 6,598 rentals across all price points - and noted that both affordable and market-rate rentals are nearly at full occupancy. 'Limited options and rising costs are creating a significant cost burden for residents,' she said. 'We're seeing 43.6 percent of renters and 20 percent of homeowners spending more than 30 percent of their income on housing, which is above the state average. Incomes simply aren't keeping pace with the cost of living .' Local real estate agent Tyler Forte, who services Clarksville from his base in Nashville, says the city has undergone a dramatic transformation in just a few years. 'Even three years ago, Clarksville was kind of Nashville's stepsister - known mainly for the military base and university, with a lot of farmland and a small-town feel,' Forte said. 'Since COVID, it's just absolutely taken off. They're building a ton of homes and commercial projects, new grocery stores, and even two new hospitals. It's gone from being an afterthought to a major city in Tennessee.' Much of that growth, Forte says, has been driven by both out-of-state buyers and Nashville residents seeking a lower cost of living. 'As Nashville prices have climbed, I've had a lot of clients who've moved to Clarksville for more affordable housing,' he explained. Forte notes that new construction dominates the market, which can be a double-edged sword. 'Most of the homes I see in Clarksville are brand new - even something built in 2015 is considered old. Builders are offering big incentives, like interest rate buy-downs through their preferred lenders. One client just locked in a 3.99 percent rate through Lennar's in-house lending program - a huge drop from the 6.5-7 percent you'd see with a typical lender. 'Because the builder owns the lender, they can offer aggressive financing deals that make new construction especially attractive,' he said. While bidding wars aren't as common as they once were, Forte says competition still exists for certain properties. 'If a home is unique, move-in ready, and priced right, it can still spark multiple offers. But out of the 80 homes I sold in the past year, only about three had bidding wars.' Some parts of the city remain hotter than others. 'The Sango area in the south is the most competitive,' Forte said. 'It's closer to Nashville, has a strong school district, and that combination is always going to drive demand.' However, Forte doesn't believe the real shortage is in housing stock. 'They're building as fast as they possibly can,' he said. 'The bigger issue is infrastructure. This was mostly farmland 10 years ago, and the public systems just aren't built to handle this kind of population growth so quickly.' Although the boom has brought new businesses and job opportunities, it has also fueled concerns about traffic congestion, rezoning battles, and environmental impacts in a city where Victorian-era streets and landmarks now sit in the shadow of sprawling new subdivisions. McLaughlin said younger residents and first-time buyers are especially hard-hit, with many unable to qualify for mortgages and a shortage of smaller 'starter' homes in the market. She warned that building quickly without careful planning could worsen traffic congestion, strain public services, and erode the character of historic neighborhoods. 'If the housing shortage persists, the most pressing concerns would be an increase in the number of cost-burdened residents, particularly those in lower- and middle-income brackets,' she said. 'That could lead to the departure of essential workers and drive prices even higher,' she added. Patrick Bowen, president of Bowen National Research, led the assessment that laid bare Clarksville's housing shortage - and its wider economic consequences. 'Whether it's rental or for-sale housing, there's not much available,' Bowen told local FOX affiliate WZTV Nashville. 'And what you do have is really not affordable for many low- to moderate-income households.' He warned that rising housing costs don't just hit residents - they ripple through the local economy. 'When you've got people spending exorbitant amounts on housing, that's less money going back into the local economy. It has an impact on employers, too; the workforce can't afford to stay in the market, or afford the rent they're paying.' Bowen says the newly compiled data can help Clarksville plan smarter: 'Now you have data to look to, so when you're setting priorities and goals, you have something that gives you structure, to say, we need to focus on this type of housing or this population.' He also stressed that rushing development could make matters worse. 'Yes, housing is needed quickly, but that doesn't mean it should be rushed. You want to make sure you're building the right kind of housing, in the right places, with the right infrastructure in place.'
Telegraph
an hour ago
- Telegraph
With Armenia and Azerbaijan, Trump has proven he can broker peace
For over three decades, my country Azerbaijan and our neighbour Armenia have been locked in one of the world's most intractable conflicts. The last 30 years have seen two major conflicts and many smaller skirmishes. During this time, consecutive rounds of peace talks have failed and failed again. But this month in Washington the stars aligned. Azerbaijan and Armenia agreed what the world thought was impossible: an agreement. This may not have happened had it not been for two factors: first, that Azerbaijan had already restored its sovereign borders after a generation when a fifth of its territory was under Armenian occupation and second, because Donald Trump was back in the White House. President Trump welcomed President Ilham Aliyev of Azerbaijan and Prime Minister Nikol Pashinyan of Armenia at the White House where they signed a declaration witnessed by President Trump reiterating and reinforcing mutual, irreversible commitment to peace and normalisation, while the two country's foreign ministers initialled the text of the future peace agreement. Azerbaijan and the United States agreed to set up a working group to prepare a strategic partnership charter and ExxonMobil and Socar, Azerbaijan's State Oil Company, inked an MOU on exploration. Adding a great measure of symbolism, President Trump signed a waiver to the infamous Section 907 of the Freedom Support Act, which prohibited U.S. assistance to Azerbaijan, a sore point in bilateral Azerbaijan-U.S. relations since 1992 and a glaring example of a counterproductive, self-defeating piece of legislation driven by narrow special interests at the expense of wider U.S. objectives in the region. Another significant step was a joint letter signed by the two foreign ministers requesting the Organization for Security and Cooperation in Europe (OSCE) to abolish its long-defunct Minsk Group, a mediating body co-chaired by France, Russia and the United States, which has, over decades, firmly established its absolute inability to produce any progress towards peace between Azerbaijan and Armenia. The importance of this joint letter should not be underestimated as it clearly demonstrates that Azerbaijan and Armenia have left the post-Soviet nightmare of never-ending, externally driven conflict-management behind and are entering the era of normalcy. Moreover, the two nations have fully assumed responsibility for their bilateral relations, exactly as neighbours and sovereign states should. Azerbaijan has long insisted on ending the Minsk Group because that would reflect a commitment to a peaceful future for our region rather than entanglement in the legacy of past conflicts. In fact, as acknowledged by the Armenian leadership, it was Azerbaijan's restoration of its territorial integrity and ending the illegal occupation of Azerbaijani lands that allowed Armenia to assert its sovereignty more forcefully. And normalisation also brings growth and development, including through regional integration and communications. Moreover, it was Azerbaijan's President Ilham Aliyev, who shortly after securing a decisive military success in 2020, proposed a roadmap for peace and normalisation. Over the last five years, the peace process slowly, with some setbacks and interruptions, progressed along the very road map Azerbaijan has suggested already in 2020. This is because over the three decades of conflict with Armenia, the international law was firmly on the side of Azerbaijan and because President Aliyev's vision is based on Azerbaijan's long-standing policy of regional development, shared prosperity and promoting sovereignty of nations in the region. Since early days of independence in 1990s, Azerbaijan has pursued a strategy of expanding partnership and making sure that the economic growth is not limited to Azerbaijan alone but includes partners such as Georgia and Central Asian nations across the Caspian. Today, such growth and path to prosperity can be shared by our neighbour Armenia because of normalisation. Nor is President Trump's support for peace in the Caucasus a new phenomenon. During Trump's first administration – I served as Azerbaijan's ambassador in Washington at the time – the U.S. Government pursued a pragmatic policy of ensuring prosperity in our region. I witnessed first-hand the hard work of the Trump administration in establishing the Abraham Accords and, having attended the Abraham Accords signing ceremony at the White House in September of 2020, I saw President Trump's ability and desire to be a global peacemaker. In fact, this is precisely what President Aliyev recognised and praised openly in July of 2024 at the Shusha Media Forum in Azerbaijan. The United States had previously attempted to address the relations between Azerbaijan and Armenia, under the Clinton administration and more seriously under the George W. Bush administration with Secretary of State Colin Powell presiding over unsuccessful talks in Key West. While I can personally attest to the beautiful setting of Florida Keys as someone present at that time, the premise of the U.S. approach was neither productive, nor sustainable. More recently, the clumsy attempts of the Biden Administration to push through a rushed success driven by special interest groups and ideological narrative predictably backfired causing major damage to U.S. interests in the wider Caspian region. This is why, Trump's approach based on a clear focus on a lasting peace, economic development and genuine interests of both Azerbaijan and Armenia, as well as the United States, is welcome and supported by President Aliyev, whose own strategy is based on a similar vision. In Washington, President Aliyev stated that Azerbaijan and Armenia are closing the page of enmity and confrontation and choosing a lasting peace. President Aliyev and Armenian Prime Minister Nikol Pashinyan agreed to advance President Trump's nomination for the Nobel Peace Prize. In addition to the most important part, the peace between Azerbaijan and Armenia, such a nomination would have another symbolic connection to our region since it has historically been, at least partially funded by the money the Nobel brothers made from the oil business in Azerbaijan's capital Baku. This is the time to look forward to a prosperous, peaceful future for our region and not listen to the usual naysayers. After all, they too benefit from peace and inclusive economic development.
