New York
CNN
—
Middle-class and wealthier Americans are heading to Dollar General. That’s benefiting the company, but it could be a warning sign for the wider economy.
Dollar General said Tuesday that sales at stores open for at least a year had increased 2.4% last quarter. The discount chain also raised its profit forecast for the year.
“We believe we are well positioned to succeed in a wide range of economic environments,” CEO Todd Vasos said on a call with analysts Tuesday.
The Trump administration’s trade policies have stoked uncertainty, raised fears of higher inflation and driven down consumer sentiment to some of the lowest levels on record. Discount stores such as Dollar General tend to gain during periods of economic strain as shoppers tighten their belts.
The company’s results beat analysts’ expectations, sending shares of Dollar General (DG) up 15% during early trading Tuesday.
Dollar General said it had gained market share from competitors during the latest quarter, both among its core low-income shopping base, as well as middle-income consumers looking to save money.
“We have seen increased (growth) from both middle and higher income customers,” Vasos said. “Our data shows that new customers this year are making more trips and spending more with us compared to new customers from last year.”
Dollar General’s primary customers earn under $40,000 a year, and the chain has more than 20,000 stores, primarily in rural areas.
Dollar General will still face pressure from tariffs, however. The company imports most of its products, and it may raise prices or stop offering some products to mitigate the impact. Dollar General also warned that “consumer spending could be pressured by tariff-related price increases.”
“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,” Vasos said.
In March, the chain said low-income Americans’ financial condition had gotten worse over the last year and more shoppers were going without basic necessities.
