①In just two days, Dollar General and Dollar Tree, representing the US 'dollar store' sector, both reported strong results and raised their full-year forecasts, driving their stock prices higher; ②Not only are low-income households increasingly reliant on 'dollar stores,' but high-income households are also flocking to them, making discount retail the biggest winner in an environment of consumer tightening.
Cailian Press, December 5 (Editor: Shi Zhengchi) Facing pressure from declining purchasing power, the U.S. 'dollar store' market is experiencing a golden period of business growth: not only are low-income families more dependent on these retailers, but affluent households are also seeking more affordable options.
On Thursday local time, Dollar General, the largest 'dollar store' in the United States,$Dollar General (DG.US)$ released its earnings report, showing a 2.5% increase in customer traffic in the previous quarter, while the average transaction amount remained unchanged. The company's revenue grew by 4.6% to $10.6 billion, with net profit rising 44% to $280 million.
This momentum also prompted Dollar General to raise its full-year same-store sales growth forecast from the previous range of 2.1%-2.6% to 2.5%-2.7%.
Affected by the earnings report, Dollar General surged 14% at Thursday's close, hitting a new high since July 2024.
On Wednesday this week, another 'dollar store' company $Dollar Tree (DLTR.US)$ also reported strong performance, with same-store sales growing by 4.2%. The company also raised its comparable sales forecast. Dollar Tree rose 3.6% after releasing its earnings on Wednesday and gained another 2.6% on Thursday.
As the name suggests, these stores primarily sell various groceries priced at $1 or $2, including daily necessities and frozen foods. Dollar General currently operates approximately 21,000 stores, mainly located in rural areas. The company focuses on maintaining 25% of its products priced at no more than $1 to attract its core customer base of households with annual incomes below $35,000.
The latest developments also indicate that affluent households in the U.S. are increasingly turning to 'dollar stores.'
Dollar General CEO Todd Vasos said on a conference call on Thursday that the company's sales in the previous quarter were driven by a 'broad customer base,' noting that as the number of customers increased, growth from high-income households was 'disproportionately significant.'
Dollar General CEO Michael Creedon also stated on Wednesday that the company attracted 3 million new household customers in the previous fiscal quarter. Among them, 60% came from households with annual incomes exceeding $100,000, and 30% were from households with annual incomes between $60,000 and $100,000.
Creedon also noted that while high-income families are shifting towards 'dollar stores,' low-income households are relying on this format more than ever before, as their average spending per visit is growing at more than twice the rate of affluent households.
Joseph Feldman, an analyst at Telsey Advisory Group, commented: 'Discount stores and dollar stores have performed well this year... In the current environment, everyone is looking for value for money.'
Editor/Joryn
