The CEOs of both major U.S. dollar stores on Thursday said consumers were focused on “value and affordability” in the second quarter — a dynamic benefiting Dollar General and Dollar Tree’s earnings.
Dollar General’s Q2 net sales jumped 5.2% year over year to $11.3 billion, according to a company press release. Its 3.5% same-store sales increase reflected a 2% increase in traffic and a 1.5% increase in average transaction amount. The company's earnings exceeded its own expectations even before considering the benefit of tariff refunds, CEO Todd Vasos said in a statement.
Meanwhile, Dollar Tree reported total sales grew 7% year over year to $4.9 billion. Same-store sales increased 3.7% due to a 3.3% jump in ticket and a 0.4% increase in traffic.
Heightened gas prices particularly benefited traffic to Dollar General, which has a stronghold in rural communities across the country.
“The sales lift was driven by both traffic and a slight uplift in basket values,” GlobalData Managing Director Neil Saunders said in emailed comments. “The former dynamic got a small boost from higher gas prices which, especially in rural areas, make the proximity and shorter drive-times of Dollar General stores a bit more attractive. We have seen this dynamic play out before and, essentially, it acts as a recruiting tool for Dollar General.”
That benefit is expected to continue lightly across the year as gas prices remain somewhat elevated, Saunders added.
Analysts were also upbeat on Dollar Tree’s return to traffic growth.
“We view the return to positive traffic as an encouraging sign that merchandising, multi-price expansion, and store execution initiatives are driving improved customer engagement,” Jefferies analysts said in a note Thursday.
However, tariff dynamics distorted Dollar Tree's earnings, the Jefferies analysts added. The retailer’s earnings per share included a significant benefit from tariff refunds, and its third quarter guidance includes an impact from tariff refund reinvestments.
Dollar Tree's Q3 guidance expects net sales between $5 billion and $5.1 billion, with comps growth in the range of 3% to 4%. The retailer projects full-year net sales from $20.5 billion to $20.7 billion, with comp growth also between 3% and 4%.
Meanwhile, Dollar General raised its financial outlook for the fiscal year, now expecting net sales to grow between 4% and 4.3%, with comps up 2.5% to 2.9%. That's compared to its previous net sales growth projection from 3.7% to 4.2% and comps growth from 2.2% to 2.7%.
