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%.
In addition to wooing value-conscious shoppers, Dollar General has tried to tackle company-specific problems that drew government scrutiny and tested customer loyalty.
Vasos highlighted some of the ways that Dollar General has tried to improve the customer experience.
Dollar General has launched its own home delivery service, which is now available at more than 3,000 stores.
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.
After the bargain retailer improved its outlook on Tuesday, claiming that it attracted more middle- and upper-class customers amid concerns that higher tariffs would reduce consumer spending, Dollar General’s stock surged more than 10%.
The retailer from Tennessee exceeded quarterly revenue and earnings projections. The company stated that instead of expecting net sales to grow by roughly 3 to 4 percent, it now expects them to grow by roughly 3 to 4 percent. In contrast to its previous estimate of roughly $5.10 to $5.80, it now anticipates diluted earnings per share to range between $5.20 and $5.80. Compared to its earlier projection of roughly 1 to 2 percent, Dollar General expects same-store sales to rise by 1 to 2.5 percent.
The retailer’s fiscal first-quarter performance in comparison to Wall Street’s projections is as follows, based on an LSEG survey of analysts.
$1.78 in earnings per share compared to… $1 point 48 is anticipated.
$10.44 billion in revenue as opposed to… $10.31 is anticipated.
In the three months ending May 2, Dollar General’s net income was $391.93 million, or $178 per share, as opposed to $363.32 million, or $1.65, in the same quarter last year.
In a retail sector that is already suffering from President Donald Trump’s tariffs, Dollar General’s performance is noteworthy. Businesses like Abercrombie and Fitch, Macy’s, and Best Buy have reduced their profit projections as a result of tariffs.
Todd Vasos, CEO of Dollar General, stated during a Tuesday earnings call that the company has made efforts to limit price increases for consumers and lessen its exposure to China. He claimed that the retailer has reduced expenses by working with suppliers, shifting production to foreign nations, and altering or replacing its products with other goods.
He claimed that indirect imports account for roughly twice as much of its total purchases as direct imports, which make up a mid- to high single-digit portion.
“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 stated, adding that the tariff landscape is still dynamic and uncertain.
The full-year guidance, according to CFO Kelly Dilts during the company’s earnings call, is predicated on Dollar General’s ability to offset “a significant portion of the anticipated tariff impact on our gross margin, but also allows for some incremental pressure on consumer spending.”. “.
Shoppers spent more money when they visited, despite a 0.3 percent decrease in customer traffic in the first quarter compared to the same period last year. As sales in the food, seasonal, home, and clothing categories all increased, the average transaction amount increased by 2 points.
Tariffs added by Vasos have also raised U. S. Customers want to find significant savings. Dollar General’s first-quarter earnings, according to Vasos, are a reflection of the company’s gains from “customers across multiple income bands seeking value.”. “,”.
Store traffic and market research, he said, show that middle- and upper-class consumers have visited the company’s stores more often and spent more money there.
“We are thrilled about our continued opportunity to grow [market] share with them, and we are happy to see this growth with a wide range of customers,” he stated.
Given that Dollar General’s main client “remains financially constrained,” those gains have been beneficial, according to Vasos. Almost 60% of core customers stated that they felt compelled to forgo necessities in the upcoming year, and 25% of customers said they had less money than they did a year ago, according to a company survey. “..”.
The majority of Dollar General’s sales are from the U. S. . customers who have limited funds. At a Goldman Sachs retail conference last fall, Vasos stated that households earning less than $30,000 annually account for about 60% of the retailer’s sales.
Dollar General has attempted to address company-specific issues that attracted government attention and put customer loyalty to the test, in addition to appealing to budget-conscious consumers. Due to workplace safety violations involving blocked fire exits and hazardous levels of clutter, the discount retailer, which operates more than 20,000 locations nationwide, has paid hefty fines to the Labor Department.
Vasos outlined a few of Dollar General’s initiatives to enhance the consumer experience. In order to maintain inventory of its best-selling items, it removed roughly 1,000 individual items from its shelves and has attempted to lower employee turnover, he said.
More than 3,000 Dollar General locations currently offer their own home delivery service. Delivery through DoorDash has also increased, as evidenced by the quarter’s sales, which were up more than 50% year over year.
Outside of the food and snack sections, Dollar General has expanded its product lines by including more luxuries like home goods and seasonal décor.
According to Vasos, middle-class and upper-class consumers who visit its stores have also increased sales in those categories.
