Latest news with #ToddVasos
Yahoo
3 days ago
- Business
- Yahoo
1 Dividend Growth Stock Down 61% to Buy Right Now
Dollar General is rapidly recovering value after weakness in 2024. The company is well positioned to deal with near-term macro challenges like increasing tariffs. 10 stocks we like better than Dollar General › With shares down more than half from an all-time high of $248 reached in 2022, Dollar General (NYSE: DG) is a fallen star that has caught the attention of value-hungry investors. Challenges like pandemic-era inflation wreaked havoc on its low-cost business model, ceding ground to larger retailers like Walmart. However, now the tables could be turning. Management's recovery efforts are starting to show results, and macroeconomic challenges like tariffs and potential recession could impact the company less than its rivals. Let's dig deeper into the reasons why this dividend growth stock could be a strong buy right now. Dollar General's business model is a natural winner. The company fills the gaps left by big box retailers by serving America's lowest-income consumers, often in rural areas and neglected urban food deserts. It keeps prices low through a streamlined, no-frills shopping experience, usually offering off-brand items in smaller-than-standard sizes. Business boomed during the pandemic era as Dollar General expanded its lineup and benefited from government stimulus efforts, which boosted consumer spending -- especially in lower-income demographics. Cracks began to show in 2022 and 2023 as demand began to fade and challenges, like inflation, ate away at consumers' purchasing power. However, under the leadership of CEO Todd Vasos (who returned from retirement in 2023), Dollar General has begun an ambitious turnaround strategy that involves reworking its supply chains and merchandise selection. So far, the results look promising. Dollar General's fourth-quarter sales jumped 4.5% year over year to $10.3 billion. And while operating income fell 49% to $294.2 million, this was influenced by noncash charges related to store closures and asset impairments that may not repeat in subsequent quarters. While Dollar General isn't totally out of the woods, there is light at the end of the tunnel. Trump's trade war may also have unexpected benefits. According to analysts at Citigroup, Dollar General may be better positioned to weather the new import levies compared to rivals. The research suggests only 10% of its sales are likely to be affected by tariffs, which is far below the 50% to 100% exposure across the retail sector. This advantage likely has a lot to do with the company's focus on food and other consumable items that tend to be produced in the United States. Dollar General may also be better suited to withstand macroeconomic risks like recession by attracting wealthier consumers who would normally shop at slightly more upscale stores like Kroger or Target. However, this is not guaranteed. Dollar General will have to work hard to differentiate itself from other low-cost retailers like Walmart, and lower tariff exposure could give it a long-term edge. Dollar General's improving fundamentals have not gone unnoticed by the market, with shares up by an impressive 28% year to date. That said, the stock remains relatively cheap, with a forward price-to-earnings (P/E) multiple of just 17. For context, the S&P 500 index has an average of 28, while industry leader Walmart boasts an eyewatering forward P/E of 38. Dollar General gives investors an affordable way to bet on the U.S. retail industry, and the company's insulation from tariff-related headwinds could make its business safer than rivals. The stock's dividend yield of 2.4% is icing on the cake. And with a payout ratio that hovers around 46%, the company has room to maintain or grow its dividend, especially as its turnaround strategy begins to reach the bottom line. Before you buy stock in Dollar General, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Dollar General wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $656,825!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $865,550!* Now, it's worth noting Stock Advisor's total average return is 994% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Citigroup is an advertising partner of Motley Fool Money. Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target and Walmart. The Motley Fool recommends Kroger. The Motley Fool has a disclosure policy. 1 Dividend Growth Stock Down 61% to Buy Right Now was originally published by The Motley Fool Sign in to access your portfolio
New York Post
5 days ago
- Business
- New York Post
Dollar General sees increase in higher-income shoppers looking to stretch their dollars
Dollar General is luring in more higher-income households as shoppers tighten their spending amid growing concerns around the economy. CEO Todd Vasos told analysts during the company's first-quarter earnings call on Tuesday that new customers this year are shopping more often and spending more per visit compared with new customers last year. They are also allocating more of their spending to discretionary categories. 'We believe these behaviors suggest that we are continuing to attract higher-income customers who are looking to maximize value while still shopping for items they want and need,' Vasos said. The company has seen more middle- and higher-income earners. During the three-month period ending in May, the company saw the highest percentage of these customers that it's seen in the last four years, according to Vasos. 'We are pleased to see this growth with a wide range of customers and are excited about our ongoing opportunity to grow share with them,' Vasos said. 3 Dollar General is attracting more high-end shoppers as regular customers have tightened their spending amid growing concerns about the current economic state of the country. REUTERS However, Vasos acknowledged that the company's core customer remains financially constrained. About 60% of them admitted in a recent survey that they felt the need to sacrifice some necessities in the coming year. Arun Sundaram, equity analyst at CFRA Research, told FOX Business that there are more higher-income households shopping at discounters, including dollar stores, mass merchandisers and club stores, in part because of 'growing price sensitivity amid persistent inflation and broader economic uncertainty.' 3 CEO Todd Vasos revealed that the company's first-quarter earnings show that new customers shopping are spending significantly more compared to new customers from a year ago. REUTERS While economic pressure is a factor, Sundaram said that 'retailers are also actively positioning themselves to appeal to a broader income base.' 'Dollar General is expanding its partnership with DoorDash, which supports higher-income household penetration through delivery convenience,' Sundaram said. 'Dollar Tree is also attracting more affluent shoppers by rolling out its multi-price point strategy to more stores, including introducing more discretionary items at $3 and $5 price points.' 3 Vasos said, 'these behaviors suggest that we are continuing to attract higher-income customers who are looking to maximize value while still shopping for items they want and need.' Getty Images He also cited Walmart's robust subscription program, Walmart+, as an example, saying it 'aligns well with its rapidly growing e-commerce business.' Walmart has also continued to gain higher earners in back-to-back quarters.
Yahoo
5 days ago
- Business
- Yahoo
Dollar stores are seeing higher-income shoppers rush in the door. It's a warning sign for the US economy.
Dollar store chains have seen higher-income shoppers flock to the stores in recent months as economic uncertainty surges and households look to save. "Higher income customers have been a meaningful growth driver for us," Dollar Tree (DLTR) CEO Michael Creedon told investors, specifically noting the chain saw an increase in customers with household incomes of more than $100,000. The company reported that same-store sales rose 5.4% in the first quarter, with improvement across all income levels. Earlier this week, Dollar General (DG) told investors it "saw the highest percent of trade-in customers" than it had in the last four years during the first quarter. Its CEO, Todd Vasos, said the company saw increased trade-in activity, or consumers who would typically shop at higher-cost competitors, from middle- and high-income consumers, who came to Dollar General instead. Its same-store sales grew 3.4% in the quarter. Data from shows that foot traffic to both retailers surged in April as some tariffs went into effect. Read more: What Trump's tariffs mean for the economy and your wallet The rise in shoppers turning to dollar stores and other discount retailers comes as evolving trade policy has created heightened economic anxiety among both consumers and businesses. A new report from ADP out Wednesday showed US private payrolls slowed significantly last month. "The weak numbers we're seeing now does not point to a labor market that's collapsing, but there is hiring hesitancy," ADP chief economist Nela Richardson told reporters on a call. Consumer confidence has also waned in recent months. It rose in May for the first time all year. PwC's Ali Furman told Yahoo Finance that while consumers showed "some resilience" month over month, they made more "discerning purchases." Dollar General expects its momentum to continue, as Vasos told investors, "Depending on where the macro environment goes, it should be very conducive to further trade-in, possibly as we move forward." Both dollar store chains tend to outperform when a weaker consumer and overall economy persist. When inflation hit 40-year highs in 2022, Dollar General and Dollar Tree stocks surged. Dollar Tree shares reached a record in April of that year, while Dollar General shares topped out in November. Year to date, Dollar General and Dollar Tree shares have handily outperformed the S&P 500 (^GSPC) — rising 45% and 18%, respectively — as well as larger rivals like Walmart (WMT) and Target (TGT), with the former calling out higher-income shoppers visiting more frequently in recent quarters. The S&P 500 is up about 1.8% this year, while Walmart stock has gained just less than 11%. Target shares are down almost 30%. Over the past year, however, both dollar store giants remained laggards, with shares down more than 20%. Tariff uncertainty may be getting more customers in the door, but the story isn't all positive for Dollar Tree. Dollar Tree stock fell as much as 10% in trading on Wednesday as the company outlined a profit hit on rising costs as a result of tariffs. The company now expects its second quarter adjusted earnings to be down as much as 50% compared to a year ago, before reaccelerating in the third quarter and fourth quarter, due to tariffs and the sale of Family Dollar. Overall, direct imports make up 41% to 43% of Dollar Tree's total retail value purchases, and China supplies the majority of those imports, per a company filing. When an analyst on the company's earnings asked how important China was to the company, Creedon said, "Global sourcing is critical." In the quarter, Dollar Tree's inventory increased 10%, or $247 million, to $2.7 billion due to "higher mark-on and inventory receipts as we expanded our multi-price assortment," CFO Stewart Glendinning said. Dollar Tree does expect strong customer traffic, however, with same-store sales expected to rise "towards the higher end" of its 3%-5% full-year outlook. Dollar Tree also updated its adjusted diluted earnings outlook and now expects to end the fiscal year in the range of $5.15 to $5.65, compared to the previously projected range of $5.00 to $5.50. Dollar General also raised its earnings forecast on Tuesday. The company now sees full-year adjusted earnings coming in between $5.20 and $5.80 per share, up from a range of $5.10 to $5.80. After a 15% rally on Tuesday, Dollar General stock was down about 1.5% in sympathy with Dollar Tree's slide on Wednesday. Dollar General's exposure to tariffs is much lower than its rival's, as 80% of its sales are food items, most of which are nonperishable items made in the US, like canned soups, beans, and chips, Morningstar analyst Noah Rohr previously told Yahoo Finance. Dollar General also directly imports less than 10% of what it sells, with less than 70% of that coming from China, Telsey Advisory Group analyst Joe Feldman wrote in a note to clients. Indirectly, the company imports roughly 10%-18% of items, with less than 40% of those coming from China, Feldman added. Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@ Click here for all of the latest retail stock news and events to better inform your investing strategy Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
6 days ago
- Business
- Yahoo
Why Dollar General Corporation (DG) Skyrocketed On Tuesday
We recently published a list of . In this article, we are going to take a look at where Dollar General Corporation (NYSE:DG)stands against other Tuesday's best performers. Dollar General grew its share prices by 15.85 percent on Tuesday to finish at $112.57 apiece as investors cheered the company's increasing number of middle- and high-income household customers. Dollar General Corporation (NYSE:DG), which mostly targets the low-income class, said Tuesday that it is now seeing an increasing number of middle- and high-income households checking out its offerings, a trend that it didn't experience for years. A busy shopping aisle filled with discounted items in a retail store. According to its CEO, Todd Vasos, the low-income shoppers, however, remain financially stressed. Based on its own study, Vasos said that one fourth of its surveyed customers reported having less income than a year earlier, while 60 percent said that they 'felt the need to sacrifice some necessities in the coming year.' In the first quarter of the year, Dollar General Corporation (NYSE:DG) netted $391.9 million, higher by 7.87 percent than the $363 million registered in the same period last year. Net sales also grew by 5 percent to $10.4 million from $9.9 million year-on-year. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey.
Yahoo
6 days ago
- Business
- Yahoo
Dollar General sees strong Q1 sales and EPS, and raises FY25 guidance
US discount store chain Dollar General has recorded $10.4bn in net sales in the first quarter (Q1) of the fiscal year 2025 (FY25), ending on 2 May 2025 - a 5.3% increase from the corresponding quarter of the previous fiscal year. The growth was attributed to new stores and a 2.4% rise in same-store sales, despite some store closures. The company also saw a 5.5% increase in operating profit, amounting to $576.1m. Gross profit as a percentage of net sales improved, rising from 30.2% to 31% year-on-year - a 78 basis point increase. This was primarily due to lower shrink and higher inventory markups, although increased markdowns partially offset these gains. The company's net income for the quarter stood at $391.9m - a 7.9% increase from the previous year's $363.3m. Diluted earnings per share (EPS) also grew 7.9% to $1.78. Selling, general and administrative expenses (SG&A) rose by 77 basis points to 25.4% of net sales, with retail labour, incentive compensation, and repairs and maintenance the main contributors to the increase. Merchandise inventories at the end of the quarter were valued at $6.6bn, a 7% decrease on an average per-store basis compared to the previous year. Capital expenditures for the quarter totalled $291m, with significant investments in store improvements, new store facilities, distribution, transportation and technology upgrades. Dollar General CEO Todd Vasos stated: 'Our efforts to improve execution and enhance the associate and customer experience are yielding positive outcomes in both our operational performance and our financial results.' 'These efforts contributed to market share gains in sales of both consumables and non-consumables, and drove growth with both our core customer and trade-in customers during the quarter." Amidst the uncertainty of tariffs and their potential impact on consumer behaviour and business costs, Dollar General has updated its fiscal year 2025 guidance. The company now anticipates net sales growth between 3.7% and 4.7%, with same-store sales expected to increase by 1.5% to 2.5%. The diluted EPS forecast is set at approximately $5.20 to $5.80, assuming an effective tax rate of around 23.5%. No share repurchases are planned for the fiscal year 2025, and capital expenditures are projected to be between $1.3bn and $1.4bn. The company also plans to carry out 4,885 real estate projects, including opening new stores in the US and Mexico, and remodel existing stores through two major projects. In March 2025, Dollar General partnered DoorDash to integrate Supplemental Nutrition Assistance Program/Electronic Benefits Transfer payment options at 16,000 locations through DoorDash Marketplace. "Dollar General sees strong Q1 sales and EPS, and raises FY25 guidance" was originally created and published by Retail Insight Network, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
