“Customers across multiple income bands [are] seeking value,” Dollar General CEO Todd Vasos said during the company’s earnings call on Tuesday, adding tariffs have encouraged customers to seek out discounted goods. “While our core customer remains financially constrained, we have seen increased trade in activity from both middle- and higher- income customers.”
“Expectations about future income prospects turned clearly negative for the first time in five years, suggesting that concerns about the economy have now spread to consumers worrying about their own personal situations,” Stephanie Guichard, senior economist for global indicators at The Conference Board, said in a statement.
Meanwhile, a recent Dollar General survey also showed 25% of customers reported having less income than they did a year ago, and nearly 60% of customers said they’d need to sacrifice on necessities this year.
Vasos said the company is also working to reduce its exposure to tariffs by diversifying the countries from which it sources its goods, and they’ve already reduced its China exposure to less than 70% of its direct imports.
“We are working diligently to mitigate the impact of current tariffs on our business as much as possible,” Vasos said.
Dollar Tree is seeing “value-seeking behavior across all income groups,” Creedon said. In particular, the company saw a “meaningful traffic increase” from households making more than $100,000, he added.
“In terms of this higher-income cohort customer, we’re really happy to see them, and we want to make sure we delight them, exceed their expectations, and create a sticky relationship with them,” Creedon said.
Net sales were up 11.3%, and Dollar Tree saw a 2.5% jump in foot traffic at their stores. The company also announced it had opened 148 new stores and is working to sell its Family Dollar business. Dollar Tree’s share price is up nearly 23% year-to-date.
