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Dollar General (DG+5.74%), often seen as a barometer for the economic health of value-conscious consumers, delivered mixed financial results in its latest earnings report, yet CEO Todd Vasos pointedly warned investors about deteriorating consumer conditions.
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“Our customers continue to report that their financial situation has worsened over the last year as they have been negatively impacted by ongoing inflation,” Vasos remarked during an earnings call Thursday. “Many of our customers report they only have enough money for basic essentials, with some noting that they have had to sacrifice even on the necessities.”
That’s not a subtle warning, considering Dollar General’s core customers often struggle to get by even when the economy is on solid footing.
“With all the uncertainty due to the tariff war heating up, consumers and businesses are becoming more defensive,” said Albert Williams, an economics professor at Nova Southeastern University.
He adds that consumer confidence in the economy has fallen and is now showing up in results at retail stores. The significance is that these economic pressures are directly impacting the average American.
“We urgently need to see more stability in the economy,” Williams said. “Uncertainty is affecting consumers, and it is making forecasting of earnings much more difficult for retail stores like Dollar General.”
The stock was up in pre-market trading as the company announced it had beat expectations for the key holiday period. And the company expects annual same-store sales growth between 1.2% and 2.2%. The high end is slightly above analysts’ average estimate of a 1.82% rise.
Despite the rosier outlook for 2025, profit fell short in the quarter that ended in January. Earnings were 87 cents a share, trailing Wall Street’s average projection of $1.50. The company cited store closings and other internal adjustments as reasons for the miss.
Dollar General operates 20,000 stores across the United States, with plans to open 500 more this year. The chain has managed to carve out a niche even as other dollar stores have struggled. Big Lots (BIG) went into bankruptcy while Dollar Tree has struggled to make its acquisition of Family Dollar profitable.
