Dollar General Corp. surged after increasing its annual guidance, helped by luring more higher-income shoppers looking for deals. The discount chain also said it expects to mitigate a significant amount of the tariffs currently in place.
The company sees same-store sales gaining as much as 2.5% this fiscal year, up from guidance in March calling for an increase as high as 2.2%. The retailer also nudged up expectations for earnings per share.
Shares of Dollar General closed Tuesday with a record gain of 16%. The stock has jumped 48% this year.
“Our core customer remains financially constrained,” Chief Executive Officer Todd Vasos said during a call with analysts. He added that more middle- and high-income consumers are trading down — a sign that even wealthy shoppers are looking for deals amid weakening sentiment. About 25% of the retailer’s customers have less income than last year, a survey it conducted showed.
The company, based in Goodlettsville, Tennessee, reported $10.4 billion in revenue for the quarter ended May 2, slightly above the average estimate of analysts. Dollar General also beat expectations for same-store sales growth.
Feeling Squeezed
The retailer’s low-income shoppers have been squeezed by inflation, and Vasos warned about 60% of Dollar General’s core customers said they felt pressured to skip buying some necessities in the coming year.
The company expects to offset most of the impact of those levies, but warned that “consumer spending could be pressured by tariff-related price increases.” It plans to raise some prices because of the levies.
Written by: Lily Meier @Bloomberg
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