Dollar General wins over higher income shoppers amid economic uncertainty
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Dollar General raised its sales and profit forecasts Thursday as value-oriented shoppers seek out deals.
Why it matters: Economic uncertainty has nudged shoppers of all income levels to seek out savings.
The big picture: With more than 2,000 items for sale at or below $1, Dollar General is benefiting from more affluent consumers trading down — a trend that has also boosted rival Walmart.
- "Ultimately, customers across all income brackets are coming to Dollar General as they seek value," CEO Todd Vasos said on an earnings call.
By the numbers: Dollar General lifted its same-store sales growth forecast for the full year from a range of 1.5% to 2.5% to a range of 2.1% to 2.6%.
- The company also raised its diluted earnings per share outlook.
Zoom in: The retailer is also running its business more efficiently.
- "The improvement was driven by lower shrink, improved inventory markups and fewer damages," according to Raymond James analyst Bobby Griffin.
- "While execution in stores can still be patchy, our channel checks suggest there has been a general uplift in standards, with fewer locations plagued by cluttered aisles or low staffing," according to GlobalData retail analyst Neil Saunders.
What to watch: Whether the company can maintain low prices even in the face of increased costs from tariffs.
- "With the rates currently in place, we believe we will be able to mitigate the vast majority of the impact on our cost of goods," the CEO said. "While the landscape remains dynamic, tariffs have begun to result in some price increases, and we will continue to work to minimize them as much as possible."
