March 12 (Reuters) – Dollar General forecast soft full-year sales on Thursday, signaling weaker demand as budget‑conscious shoppers grow more selective with their purchases amid economic uncertainties.
Shares of the company were down about 6% in premarket trading, after rising more than 75% in 2025.
Increasing costs of living and signs of deteriorating labor market conditions are making consumers, especially from lower-income groups, hesitant to shop for nice-to-have items, in turn hurting sales at retailers.
The U.S. unemployment rate rose 4.4% in February, from 4.3% in January. Consumer prices also likely accelerated in February, fueled by tariffs and a rise in the costs of gasoline and oil due to tensions in the Middle East.
The company expects fiscal 2026 same-store sales to grow in the range of 2.2% to 2.7%, compared with analysts’ estimates of 2.48%, according to data compiled by LSEG.
The midpoint of its annual profit forecast range of $7.10 to $7.35 per share was largely in line with estimates of $7.21 per share.
Analysts with Truist Securities said sales growth from higher-income consumers softened noticeably in February amid a broader slowdown early in the first quarter, adding that the forecast could be more “conservative” than some investor expectations.
Dollar General has been contending with stiff competition from retail behemoth Walmart and e-commerce giant Amazon.com, which have managed to win over value-seeking customers.
Walmart, which saw online sales increasingly driven by higher‑income shoppers, maintained a cautious full‑year outlook despite posting upbeat quarterly sales.
However, Dollar General’s efforts to offer the majority of its products at or below $1, coupled with attractive holiday deals, helped the company beat sales and profit estimates during the holiday quarter.
Its fourth-quarter same-store sales grew 4.3%, above estimates of 3.34%.
The company, which has beaten quarterly profit estimates for five consecutive quarters, earned a profit of $1.93 per share in quarter ended January 30, topping estimates of $1.65 per share.
Rival Dollar Tree is scheduled to report earnings next week.
(Reporting by Anuja Bharat Mistry and Krisha Bhatt in Bengaluru; Editing by Devika Syamnath)
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