American consumers are all about saving money! US discount store giant Dollar General (DG.US) has raised its financial profit guidance for the year and exceeded expectations.

Discount chain Dollar General (DG.US) in the United States announced third-quarter earnings for the period ending October 31st exceeded expectations, and raised its annual profit forecast. The company is optimistic about the strong demand for its discount stores, and is committed to reducing costs and minimizing inventory-related losses. According to data collected by LSEG, earnings per share for Q3 were $1.28, a 44% increase year-over-year, surpassing analysts' expectations of $0.95. Net sales for Q3 were $10.65 billion, slightly higher than the expected $10.64 billion. Comparable store sales for Q3 increased by 2.5%, reflecting a 2.5% increase in foot traffic, while average transaction amount remained unchanged. Gross profit margin increased by 107 basis points to 29.9%, driven by higher inventory markup rates and reduced losses, but this growth was partially offset by increased provision for the LIFO method. Looking ahead, the company expects earnings per share for the fiscal year 2025 to be between $6.30 and $6.50, higher than the market expectation of $6.14, and previously guided $5.80 to $6.30; it expects comparable store sales to increase by 2.5% to 2.7% year-over-year, previously guided at 2.1% to 2.6%; it anticipates net sales to grow by 4.7% to 4.9%, previously guided at 4.3% to 4.8%, which means revenue will reach between $42.52 billion and $42.6 billion, exceeding the market expectation of $42.49 billion. These forecasts cover the 4,885 real estate projects that the company plans to implement in fiscal year 2025, including opening 575 new stores in the United States, and up to 15 new stores in Mexico. The previous day, its competitor Dollar Tree, Inc. (DLTR.US) also raised its annual profit guidance. Against the backdrop of an unstable U.S. economy and a weak labor market, discount stores are attracting middle- to low-income Americans seeking more affordable options and better seasonal deals. Dollar General's pricing strategy is to keep approximately 25% of its products priced at $1 or less, catering to its core customer base - U.S. households with annual incomes below $35,000. This strategy has also made the company the primary choice for these customers. The better-than-expected performance of discount stores in the United States sends a signal: inflation pressure continues to exist, and consumers (especially middle- to low-income groups, as well as the increasingly growing middle-class customers) are actively seeking ways to save money. Discount stores typically offer low-priced and essential goods. When sales and foot traffic at these stores increase, it indicates that consumers are highly sensitive to prices. Both the CEOs of Dollar General and Dollar Tree, Inc. mentioned that not only traditional core customer groups, but even some middle-class and wealthy individuals are beginning to turn to discount stores for shopping. This shift across income levels in consumer spending demonstrates that seeking "value maximization" has become a universal consumer trend, even families with better economic conditions are cutting back on non-essential spending. The discount retail industry is inherently defensive. During periods of economic slowdown or uncertainty, the performance of these companies often outperforms the broader retail sector. Strong performance suggests that consumer confidence may not be as stable as other macroeconomic indicators suggest, with many households preparing for potential economic downturns. This view also seems to be confirmed by the latest financial reports from Walmart Inc. and Target Corporation. Previously, Walmart Inc. reported better-than-expected performance for the third quarter of fiscal year 2026, and raised its full-year performance guidance for the second consecutive quarter, indicating the global retail giant's continued strong growth momentum in an environment of economic uncertainty - the company is attracting more price-sensitive consumers and gaining greater share in digital consumption. In contrast, Target Corporation, whose core customer group is the American middle class, had mixed results in the third quarter. Facing price reductions and soft demand in key product areas, its key retail performance indicator of comparable store sales fell more than market expectations. After the earnings announcement, Dollar General's stock price rose by about 4% in pre-market trading. The company's stock has risen by approximately 45% so far this year.