Dollar General CEO turns heads with earnings call comments

The buck stopped here but not for long.

Shares of Dollar General  (DG)  were heading off for the wild blue yonder on June 3 after the discount retailer beat the stuffings out of Wall Street’s first quarter earnings expectations.

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The Goodlettsville, Tenn., company posted record revenue of $10.44 billion and, analysts noted, was one of the few retailers to raise guidance.

“We believe our efforts are resonating with a wide range of customers as they continue to seek value in our more than 20,000 store locations around the country,” CEO Todd Vasos told analysts during the company’s earnings call.

That range of customers includes people on the higher end of the income bracket, Vasos said.

“While our core customer remains financially constrained, we have seen increased trade in activity from both middle- and higher-income customers,” he said. 

Dollar General attracting higher-income customers

“Our data shows that new customers this year are making more trips and spending more with us compared to new customers from last year while also allocating more of their spend to discretionary categories.”

Vasos said the company believes this behavior suggests Dollar General is continuing to “attract higher-income customers who are looking to maximize value while still shopping for items they want and need.”

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“To that end, in Q1, we saw the highest percent of trade in customers we’ve had in the last four years,” he said. “We are pleased to see this growth with a wide range of customers and are excited about our ongoing opportunity to grow share with them.”

Vasos’s comments come at a crucial time. As President Donald Trump continues his trade war with the rest of the planet, consumers are looking to stretch their dollars like a yoga teacher on an oil slick.

More than half of shoppers say that when they shop in the coming months, they plan to prioritize products with the lowest prices, Chain Store Age reported in April, citing a survey of consumers and retailers by cash back shopping platform Rakuten.

Economic growth easing, inflation resurges

In addition, economic growth forecasts for the U.S. and globally were cut by the Organization for Economic Cooperation and Development as Trump’s tariff plan weighs on expectations.

The U.S. growth outlook was downwardly revised to just 1.6% this year and 1.5% in 2026. In March, the OECD was still expecting a 2.2% expansion in 2025.

Inflation pressures have resurfaced in some economies, and higher trade costs in countries that are raising tariffs are expected to push inflation up further, although the impact will be offset partly by weaker commodity prices, the group said.

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“The global economy has shifted from a period of resilient growth and declining inflation to a more uncertain path,” OECD Secretary-General Mathias Cormann said in statement. 

“Our latest economic outlook shows that today’s policy uncertainty is weakening trade and investment, diminishing consumer and business confidence and curbing growth prospects.”

Cormann said governments need to engage with each other “to address any issues in the global trading system positively and constructively through dialogue.”

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Vasos said Dollar General’s direct imports remain a relatively small percentage of all overall purchases with most years in the mid- to high-single-digit range.

“We have continued to diversify the countries of origin as part of our direct foreign sourcing strategies in recent years,” he said.

“Importantly, we have successfully reduced our China exposure to less than 70% of our direct imports. And we estimate less than 40% of our indirect imports are sourced from China.”

Dollar General delivered: Analyst

Gordon Haskett analyst Chuck Grom upgraded Dollar General to accumulate from reduce with a $125 price target, according to The Fly.

“The bar was high and Dollar General delivered,” said the analyst, who highlighted the retailer as one of the few in the sector to raise guidance following its Q1 report.

Dollar General’s ability to do so is a “credit to both the company’s increased confidence in its own executional capabilities as well as an illustration that it remains among the most insulated from the wide-ranging tariff overhang,” he said.

“What we’re working on right now, as you would imagine from Dollar General, is what does that that future look like,” Vasos said.

“And that is how do we retain this trade in consumer that we’ve been blessed with, if you will, over the last couple quarters, and how do we continue to keep them?”

“So that’s being worked on as we speak,” he added. “We’ve got a nice playbook for that, but we want to make sure we continue to work that.”

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