Dollar General has reported an uplift in sales for the first quarter, which an analyst considered impressive given the unfavorable macroeconomic environment.
The company’s net sales for the quarter ended May 2 rose 5.3 per cent to $10.4 billion, with same-store sales up 2.4 per cent.
Operating profit increased 5.5 per cent to $576.1 million and net income grew 7.9 per cent to $391.9 million.
GlobalData MD Neil Saunders said the increase in sales, and especially comparable sales, was impressive as the macro backdrop continues to be broadly unhelpful, with core lower income consumers still facing pressure on their finances.
There were some mitigation factors as consumers gently stocked up on things in anticipation of tariffs and the wintery weather across some parts of the country drove more shoppers to Dollar General for essential purchases, he continued.
The number of stores where standards are lacking has decreased, Saunders stated, adding that the chain had made some improvements with better scheduling and a modest investment in labor.
The analyst also pointed out the potential increase in competition in rural areas, where Dollar General had a captive audience for a long time, amid the expansion of Amazon’s fast delivery service and the ongoing delivery push by Walmart.
However, there will also be some favorable shifts, with the ending of the de minimis rule likely to make sites like Temu less attractive, he added.
For the full year, the company expects net sales to increase 3.7-4.7 per cent and comparable sales to grow 1.5-2.5 per cent.
This guidance assumes the company will be able to mitigate a significant portion of the potential impact from current tariff rates, but that consumer spending could be pressured by tariff-related price increases.
