Dollar General sees 'accelerated' customer trade down as higher-income shoppers cut spending

Dollar General sees ‘accelerated’ customer trade down as higher-income shoppers cut spending

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6.3.2026

Quick Facts

Dollar General’s Q1 net sales grew 3.4% year-over-year to $10.8 billion with same-store sales up 2%
CEO says customers earning over $100,000 are trading down at an ‘accelerated rate’ due to inflation
Stock has dropped 70% over two years amid competition from Walmart, Shein and Temu

Dollar General customers are trading down at an ‘accelerated rate’ as inflation continues to pressure household budgets across all income levels, CEO Todd Vasos said during Tuesday’s earnings call.

The discount retailer’s first quarter net sales grew 3.4% year-over-year to $10.8 billion. Same-store sales increased 2%, driven by a 1.4% bump in store traffic and a 0.5% increase in average transaction amounts.

Higher-income shoppers are driving much of the trade-down activity. Vasos specifically noted increased trading down among customers making over $100,000 annually.

‘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 said. ‘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.’

The retailer’s core customers cut back on household expenses during the first quarter as rising gas prices added financial pressure. Rural customers are especially affected ‘as they work to minimize trip distance and make trade-offs in their search for everyday affordability,’ Vasos added.

Customer shopping patterns reflect the financial strain. ‘Traffic and basket composition is consistent with what we have historically observed when our core customer feels more pressured on their spending as they come in more often, but have smaller basket sizes,’ the CEO said.

Dollar General faces operational headwinds despite the traffic gains. The company dealt with inventory issues that led to higher damaged merchandise, theft and markdowns. Gross margin fell from 31.1% to 30% in the second quarter of 2024.

Competition has intensified from Walmart and online players like Shein and Temu. Dollar General’s stock has slumped nearly 70% over two years amid the competitive pressure.

The company expects annual same-store sales growth between 1.2% and 2.2% for fiscal 2025. The profit forecast of $5.10 to $5.80 per share came in below analyst estimates of $5.85.

Vasos said the company is not anticipating improvement in the macroeconomic environment this year, particularly for core customers. Dollar General is focusing on improving private-label brands and remodeling stores as part of its turnaround strategy.