Dollar General Corp (NYSE:DG), the discount retailer, saw its shares rise 5% in pre-market trading on Thursday after its sales forecasts came in ahead of Wall Street estimates.
Sales in 2024 are expected to jump by between 6% and 6.7%, beating market estimates, which predicted it would rise 4.4% to US$40.33 billion.
The increase in demand comes as US consumers search for better deals while stubborn inflation continues to tick prices higher.
“With customer traffic growth and market share gains during the quarter, we believe our actions are resonating with customers,” chief executive officer Todd Vasos said.
Under Vasos’ strategy, the company has upped its employee presence, improved customer engagement and expanded its private-label brands.
In turn, this has allowed Dollar General to stabilise and fight back against stiff competition in Walmart and online retailers like China-based Temu.
During Dollar General’s fourth quarter, which included the festive period, net sales rose to US$9.86 billion, pipping Wall Street guidance of US$9.78 billion.
Despite the share price lift, annual profit forecasts remain below market expectations, highlighting the effects of a weakened supply chain and higher costs for raw materials and labour.
Profits are predicted to reach between US$6.80 and US$7.55 per share, with market guidance having estimated US$7.55.
Gross margins during the quarter dropped from 30.9% to 29.5% year-on-year, the group added.