Dollar General’s shares surged over 10% after the company reported better-than-expected earnings and raised its financial outlook. For the fiscal first quarter, the company posted earnings per share of $1.78, beating the $1.48 expected by analysts, and revenue of $10.44 billion, surpassing the $10.31 billion forecast. As a result, the retailer now anticipates net sales growth of 3.7% to 4.7% and raised its earnings forecast to a range of $5.20 to $5.80 per share, up from the previous $5.10 to $5.80.
Strategic Supply Shifts and Changing Demographics Drive Growth Amid Economic and Tariff Pressures
Despite growing concerns over tariffs affecting many U.S. retailers, Dollar General has taken strategic steps to reduce its exposure. CEO Todd Vasos stated that the company has decreased its dependence on Chinese imports by relocating manufacturing to other countries and modifying its product mix.
Earnings Beat and Raised Forecast Push Dollar General Shares Up as Wealthier Shoppers Boost SalesThese actions have helped keep price increases to a minimum, even as tariff-related conditions remain uncertain. CFO Kelly Dilts noted that the company’s full-year guidance accounts for potential tariff effects, while also aiming to minimize any negative impact on consumer pricing.
The retailer’s success is being driven by increased spending from middle- and higher-income shoppers seeking value amid economic uncertainty. While store traffic dipped slightly (down 0.3%), the average transaction value rose by 2.7%. Vasos noted this shift in customer demographics, with market research indicating more frequent visits and higher spending from these income brackets. The move comes as Dollar General’s core low-income customers continue to face financial constraints, with many reporting a need to cut back on necessities.
Improving Operations, Expanding Delivery, and Targeting Growth Through Discretionary and Premium Offerings
To address internal challenges and improve customer experience, Dollar General has made several operational upgrades. These include reducing employee turnover, removing underperforming items to keep popular products in stock, and addressing safety violations that previously drew fines. The company has also expanded its delivery services, now reaching over 3,000 stores with its in-house offering and seeing over 50% year-over-year growth in DoorDash-facilitated deliveries.
Dollar General continues to expand its merchandise beyond essentials, increasing sales in discretionary categories like home decor and seasonal items, appealing especially to higher-income customers. Its newer chain, Popshelf, is tailored to this demographic, focusing on non-essential, higher-margin items. Though specific sales figures were not disclosed, Vasos confirmed strong same-store sales growth and highlighted recent layout changes to emphasize popular categories such as toys and beauty products.
