Dollar General raised its full-year forecast on Tuesday after posting stronger-than-expected earnings and revenue in the first quarter, as tariff uncertainty and economic pressures drove budget- and middle-income consumers to its stores. Shares surged more than 13%, buoyed by growing transaction sizes and gains across merchandise categories.
The Tennessee-based discount retailer now expects same-store sales to rise 1.5% to 2.5%, up from its prior range of 1.2% to 2.2%. Net sales are projected to grow 3.7% to 4.7%, while full-year diluted earnings per share are expected to fall between $5.20 and $5.80, up from the previous low-end estimate of $5.10.
"Looking ahead, we are uniquely well-positioned to serve our customer in a variety of economic environments," Dollar General CEO Todd Vasos said in a press release. On an earnings call, he added that tariffs have "increased U.S. consumers' desire to find deep discounts" and the company is seeing "customers across multiple income bands seeking value."
In the three months ended May 2, Dollar General reported net income of $391.93 million, or $1.78 per share, up from $363.32 million, or $1.65 per share, a year earlier. Analysts surveyed by LSEG had expected $1.48 per share. Revenue climbed 5.3% to $10.44 billion, beating Wall Street expectations of $10.31 billion.
While customer traffic dipped 0.3% from the same period last year, average transaction value rose 2.7%, helped by increased spending in categories like food, seasonal goods, home, and apparel. CFO Kelly Dilts said the company expects to offset "a significant portion of the anticipated tariff impact on our gross margin."
Dollar General acknowledged uncertainty over Trump's evolving tariff policy, noting that backup plans are in place in case the 30% levy on goods from China reverts to the previous 145% rate. The company said the outlook assumes current rates will remain through mid-August.
Direct imports make up a mid- to high single-digit share of overall purchases, while indirect imports account for roughly twice that, according to Vasos. To reduce reliance on Chinese supply chains, Dollar General has worked with vendors to shift production and adjust merchandise offerings.
Vasos said internal surveys show 25% of customers report lower income than a year ago, and nearly 60% expect to "sacrifice on necessities in the coming year." Yet the company has expanded its appeal to more affluent households. "We are pleased to see this growth with a wide range of customers and are excited about our ongoing opportunity to grow [market] share with them," he said.
To improve operations, Dollar General has removed about 1,000 items to focus on top-selling products, reduced employee turnover, and expanded its home delivery network, including through DoorDash, where sales grew over 50% year over year. It plans to open 575 new stores in 2025.
