Dollar General Corp. gave investors a mixed bag on Thursday as it barely increased its sales forecast while also pointing to looming pressure on costs and margin.
The discounter has benefited from shoppers looking for more deals. The chain has also been less impacted by US tariffs than other retailers.
Dollar General now sees same-store sales rising as much as 2.6% this fiscal year, just 0.1 percentage points above the top of its previous guidance.
The chain also increased its earnings outlook, but pointed to higher costs for repairs and maintenance in the current quarter and tougher comparisons in the final period of its fiscal year, which runs through January.
Dollar General’s shares rose less than 1% at 11:05 a.m. in New York, rebounding from an earlier decline of nearly 5%. The stock had gained 47% this year through Wednesday’s close, outperforming a 10% gain in the S&P 500 Index.
The retailer also reported stronger-than-expected sales for last quarter. That offered more evidence that US shoppers are still willing to spend on items they see as good value, Chief Financial Officer Kelly Dilts said on the earnings call.
Retail earnings have been largely upbeat this month as Americans keep opening their wallets, tamping down worries about tariffs and inflation.
Discount retailers have done particularly well as more consumers focus on saving money. Dollar General’s results follow sales beats from Kohl’s Corp., Walmart Inc., TJ Maxx owner TJX Cos. and Ross Stores Inc.
Dollar General’s Chief Executive Officer Todd Vasos said that the company will be able to mitigate the vast majority impact of tariffs on their cost of goods.
The company generates about 80% of sales from food and consumable goods, which makes it less reliant on imports subject to new US levies.
Dollar Tree Inc., a competitor that also offers low-price staples, is scheduled to report results on Sept. 3.
Written by: Janet Freund, Lily Meier, and Rachel Gamarski — With assistance from Subrat Patnaik @Bloomberg
The post “Dollar General’s Small Outlook Bump Underwhelms Investors” first appeared on Bloomberg