Strong Earnings Boost Dollar General Stock
Dollar General (DG) saw a 7% surge in stock price after reporting better-than-expected earnings, revenue, and same-store sales growth for its fiscal fourth quarter. Despite ongoing economic challenges, bargain-hunting consumers continue to drive sales at dollar-store chains.
On Thursday, before the market opened, Dollar General exceeded Wall Street expectations across key financial metrics:
- Adjusted earnings per share (EPS): $1.68 (vs. expected $1.50)
- Revenue: $10.30 billion (vs. expected $10.25 billion)
- Same-store sales growth: 1.2% (vs. expected 0.9%)
Morningstar analyst Noah Rohr commented that while the results were better than anticipated, the economic environment remains tough, particularly for low-income shoppers who continue to experience financial pressure.
Dollar Tree Stock Also Rises Ahead of Earnings Report
Dollar Tree (DLTR) also saw a 7% increase in its stock price following Dollar General’s strong earnings report. The retailer is set to announce its fiscal Q4 results on March 26 before the market opens. Analysts expect:
- Revenue: $8.27 billion
- Adjusted EPS: $2.21
- Same-store sales growth: 1.5%
The company is undergoing leadership changes, with Stewart Glendinning replacing CFO Jeff Davis, effective March 30. Analysts predict these shifts could impact Dollar Tree’s business strategy moving forward.
Consumer Spending Shifts Toward Discount Retailers
Dollar General CEO Todd Vasos acknowledged that economic uncertainty continues to impact their core customer base, which primarily consists of households earning less than $35,000 per year. With inflation persisting, shoppers are prioritizing affordability and convenience more than ever.
Vasos stated that middle- and high-income consumers are also turning to dollar stores for savings. The trend of “trading down” from premium retailers to discount stores is increasing as financial pressures mount.
Tariffs and Economic Slowdown Could Shape 2025 Retail Trends
Experts warn that new tariffs and economic headwinds may further impact consumer spending. S&P Global Ratings retail director Matt Todd predicts that a potential economic slowdown could drive even more consumers to discount retailers.
Dollar General is in a better position to mitigate tariff impacts as 80% of its sales come from food items, most of which are U.S.-made nonperishable products like canned soups, beans, and chips. In contrast, Dollar Tree relies more on imports, particularly from China, which could make it more vulnerable to price fluctuations.
Vasos reassured investors, stating, “We successfully navigated the tariff impact in 2018 and 2019, and we are confident we can do the same in 2025.”
Looking Ahead: Growth Projections for 2025
Dollar General expects:
- Net sales growth: 3.4% to 4.4%
- Same-store sales increase: 1.2% to 2.2%
- EPS range: $5.10 to $5.80
As consumer spending habits evolve, discount retailers like Dollar General and Dollar Tree remain key players in the retail sector. Analysts continue to monitor their performance as economic uncertainty persists.
