In this articleDGFollow your favorite stocksCREATE FREE ACCOUNTThe Dollar General discount store logo is displayed on a truck in Austin, Texas, Aug. 30, 2024.Brandon Bell | Getty ImagesShares of Dollar General jumped more than 10% on Tuesday after the discounter raised its outlook, saying it drew more middle- and higher-income shoppers amid fears that higher tariffs would hurt consumer spending.The Tennessee-based retailer beat quarterly expectations for revenue and earnings. The company said it now anticipates net sales will grow about 3.7% to 4.7%, compared to its previous expectation of about 3.4% to 4.4%. It expects diluted earnings per share to range from $5.20 to $5.80, compared to its prior outlook of approximately $5.10 to $5.80. Dollar General anticipates same-store sales will increase 1.5% to 2.5%, higher than its previous guidance of about 1.2% to 2.2%.Here’s how the retailer did for the fiscal first quarter compared with Wall Street’s estimates, according to a survey of analysts by LSEG:Earnings per share: $1.78 vs. $1.48 expectedRevenue: $10.44 billion vs. $10.31 expectedIn the three-month period that ended May 2, Dollar General reported net income of $391.93 million, or $1.78 per share, compared with $363.32 million, or $1.65, in the year-ago quarter.Dollar General’s results stand out in a retail industry that is already taking a hit from President Donald Trump’s tariffs. Companies including Best Buy, Macy’s and Abercrombie & Fitch have cut their profit outlooks due to tariffs.On an earnings call Tuesday, Dollar General CEO Todd Vasos said the company has worked to reduce its exposure to China — and limit price hikes for shoppers. He said the retailer has worked with vendors to cut costs, moved manufacturing to other countries and made changes to its products or swapped them out for other merchandise.He said direct imports make up about a mid- to high single-digit percentage of its overall purchases and indirect imports are about double that.”While the tariff landscape remains dynamic and uncertain, 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,” he said.CFO Kelly Dilts said on the company’s earnings call that full-year guidance assumes that Dollar General will be able to offset “a significant portion of the anticipated tariff impact on our gross margin, but also allows for some incremental pressure on consumer spending.”Customer traffic dipped by 0.3% in the first quarter compared to the year-ago period, but shoppers spent more when they visited. The average transaction amount rose 2.7%, as sales in the food, seasonal, home and apparel categories all grew.Vasos added tariffs have also increased U.S. consumers’ desire to find deep discounts. Vasos said the company’s first-quarter results reflect Dollar General’s gains from “customers across multiple income bands seeking value.”He said store traffic and the company’s market research indicates that more middle- and higher-income customers have come to its stores more frequently and spent more when they visited.”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.Those gains have helped as Dollar General’s core customer “remains financially constrained,” Vasos said. According to a survey by the company, he said 25% of customers reported having less income than they did a year ago and almost 60% of core customers said “they felt the need to sacrifice on necessities in the coming year.”Dollar General’s sales largely come from …
