Discount retailers Dollar Tree, Inc. (NASDAQ: DLTR) and Dollar General Corporation (NYSE: DG) have seen their stocks gain more than 30% in the past three months. The dollar stores continue to gain in an uncertain economic environment where consumers remain budget-conscious and seek value in their purchases.
One-stop shop for all customers
Dollar Tree and Dollar General are thriving on their ability to offer a wide assortment of products at affordable price points to a broad range of customers. The retailers are attracting customers across all income brackets who are price-sensitive and looking to stretch their budgets. While they are seeing steady demand from their core customers who come from low-to-middle income households, they are also gaining traction with customers from higher-income households.
In the third quarter of 2025, Dollar Tree saw net sales from continuing operations increase 9.4% year-over-year to $4.7 billion. Same-store sales rose 4.2%, fueled mainly by growth in average ticket as traffic declined slightly. Dollar General’s net sales grew 4.6% to $10.6 billion in Q3 2025 versus the previous year. Same-store sales rose 2.5%, driven by a rise in traffic while average transaction amount stayed flat.
The retailers are seeing growth in both the consumables and discretionary categories, with the latter now outpacing the former. In Q3, DLTR saw comps grow 4.8% in discretionary while in consumables, it was 3.5%. DG also saw comp sales growth in non-consumables surpass consumables.
In Q3, Dollar Tree saw gross margin increase 40 basis points to 35.8%, driven by lower costs and favorable sales mix. Dollar General’s gross margin expanded 107 basis points to 29.9%, driven by higher inventory mark-ups and lower shrink. DLTR’s adjusted earnings per share grew 12% to $1.21 while DG’s EPS grew nearly 44% to $1.28 in Q3.
More room for growth
As mentioned on its earnings call, Dollar Tree sees significant room for growth with higher income customers. Despite their higher income, larger average basket size and ability to spend more, the average per household spend for higher-income customers remains low due to trip frequency. DLTR believes that its relationship with higher-income customers is still in the early stages and that a rise in trip frequency among these customers will be a huge growth driver due to their tendency to build bigger baskets.
Multi-price is another growth driver for Dollar Tree. The multi-price strategy has had a positive impact on sales and per unit profitability, with each multi-price item sold generating 3.5 times more profit than each non-multi-price item sold during Halloween this year. The company believes multi-price will broaden its value proposition and help drive cost leverage.
Meanwhile, Dollar General sees opportunity for further growth in rural America and it plans to open new large-format stores in these communities. It also plans to remodel many of its stores to help offer a larger assortment of products to rural customers, thereby driving growth.
Upbeat outlook
Both Dollar Tree and Dollar General raised their outlooks for fiscal year 2025. DLTR expects net sales from continuing operations to be $19.35-19.45 billion with comparable store sales growth of 5.0-5.5%. Adjusted EPS is expected to be $5.60-5.80. DG expects net sales growth of 4.7-4.9% and same-store sales growth of 2.5-2.7%. EPS is expected to be $6.30-6.50.
