March 12 (Reuters) - Dollar General forecast annual comparable sales below Wall Street estimates on Thursday, as bargain-hunting customers turn to other discount stores and online retailers for better deals amid economic uncertainty.
Its shares, which rose more than 75% in 2025, were down about 5% in premarket trading even though the company beat estimates for the holiday quarter.
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 cost 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.
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 even after reporting fourth-quarter sales ahead of estimates.
However, Dollar General's efforts to offer the majority of its products at or below $1, coupled with attractive holiday deals, helped in beating sales and profit estimates during the quarter.
The company reported fourth-quarter same-store sales growth of 4.3%, compared with analysts' estimates of 3.34%.
It earned a quarterly profit of $1.93 per share, above 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)
