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Shares of Dollar Tree Inc (NASDAQ:DLTR) and Dollar General Corp (NYSE:DG) rebounded from a slide that wiped off nearly a fifth of their value last week after huge profit declines at bigger rivals Walmart (NYSE:WMT) Inc and Target Corp. (NYSE:TGT)
The dollar store chains also reported better-than-expected first-quarter results.
More low-income families were browsing the aisles at dollar stores for cheaper tissues and cereals after federal stimulus payments – which were offered to boost the economy after a pandemic-led slowdown- stopped and prices of essentials soared.
Even customers who typically steer clear of dollar stores could turn to them, as they did during the financial crisis of 2008, Wall Street brokerages have said.
“Value and convenience are more important than ever to our shoppers and the communities we serve,” Dollar Tree Chief Executive Officer Michael Witynski said in a statement.
Dollar Tree raised its fiscal 2022 net sales forecast to between $27.76 billion and $28.14 billion from $27.22 billion to $27.85 billion.
The Family Dollar parent also increased its earnings per share forecast to between $7.80 and $8.20 from its prior range of $7.60 to $8, as it books margin gains from raising product prices by 25% to $1.25 at Dollar Tree.
Dollar General only reaffirmed its forecast for fiscal 2022 per-share earnings, as sales from consumables with low gross margins including paper, food and cleaning products were rising.
The discounter forecast a 3% to 3.5% increase in fiscal 2022 same-store sales, compared with its prior outlook of a 2.5% rise. Analysts were expecting growth of 2.3%, according to Refinitiv IBES.
