Shares of Dollar General and Dollar Tree popped as the discounters beat Wall Street’s quarterly earnings takeaways. In addition, the shares raised outlooks for the coming year. And speaking of consumers flocking to lower prices during inflationary times. Dollar General shares rose 13.71% to close at $222.13. Dollar Tree shares jumped 21.87% to close at $162.80.
The two retailers saw opportunities to grow. This is because Americans weigh value more heavily in their purchasing decisions.
Dollar General CEO Todd Vasos said that we are observing our core customers shop more intentionally. He added that we’re starting to see the next tier of customer’s shop more with us.
Dollar Tree Executive Chair Rick Dreiling listed many challenges that consumers are facing. He added that many consumers are living paycheck to paycheck. Value retail can become part of the solution in tough times. This can help families stretch their dollars to meet their evolving needs.
Dollar General and Dollar Tree beat expectations on fiscal first-quarter earnings, revenue, and same-store sales. Dollar Tree said it now expects net sales for the year to range from $27.76 billion to $28.14 billion.
Dollar General said it expects net sales growth of about 10% to 10.5%. It raised its same-store sales takeaways from approximately 3% to 3.5%.
Dollar Tree CEO Michael Witynski told analysts, “We believe that’s a traffic driver, and as the customers experience the items and appreciate the value we’re giving them, over time, we believe that that will help drive traffic into the overall store, not just those categories.”
Dollar General will open 1,100 new locations this year. In addition, it will expand its new store concept, PopShelf. Dollar Tree is opening 590 stores this year.
Dollar Tree and Dollar General weren’t immune to higher costs in the first quarter. However, Vasos said Dollar General could trade to other items or trade down in sizes if particular goods rise in price. At Dollar Tree, price hike takeaways give a big boost to profitability.
