Dollar Tree (DLTR) just joined Dollar General (DG) and Walmart (WMT) in sending a clear signal about the state of the American consumer: When it comes to groceries and small indulgences, people are increasingly hunting for bargains. They’re still spending, yes. But they’re doing so more cautiously and with an eye to tighter budgeting. That’s spelling boom times for retailers at the most cost-conscious end of the spectrum.
On Tuesday, the discount chain reported first-quarter same-store sales growth of 5.4%, powered by a 2.5% increase in customer traffic and a 2.8% increase in average ticket size. EPS came in at $1.26, or about 5% above expectations. By reaffirming its full-year outlook while many retailers are pulling guidance or revising down, Dollar Tree management further underlined the message: Recessionary shopping patterns appear here to stay. CEO Mike Creedon explained that consumers are increasingly looking for “value, convenience, and discovery.”
That’s almost exactly what Dollar General, another major discount retailer, said in its results just yesterday, when it posted net sales of $10.4 billion, up 5.3%, and raised its full-year guidance. Same-store sales rose 2.4%, and CEO Todd Vasos cited growth from both Dollar General’s “core customer” and “trade-in customers” — a euphemism for more middle-income Americans who are now shopping like low-income ones.
The same recessionary pattern showed up in Walmart and Target’s (TGT) latest results, too. Walmart posted stronger-than-expected grocery gains in May, specifically driven by households earning over $100,000 — a classic “trading down” behavior.
Target, meanwhile, saw store traffic fall 5.7% and slashed its full-year forecast. Earnings were down more than 20% year-over-year. A retailer that tends to thrive in times of consumer confidence — capturing upper-middle-income spend on home goods, apparel, and beauty — Target is now feeling the strain. Executives pointed to consumer anxiety and spending pullbacks on discretionary items as key factors behind the downturn.
By contrast, Dollar Tree’s 4.6% growth in discretionary categories — its best since 2022 — suggests shoppers are still willing to spend on non-essentials if they’re at rock-bottom prices. And while Dollar Tree acknowledges pressure on margins because of tariff policy and the trade wars, the company mostly expects to be able to mitigate these pressures. That kind of confidence might be much harder to find in a different macro environment, considering Dollar Tree’s sourcing and supplier mix, which is deeply exposed to China.
More evidence of these trends is showing up in returns data.
In one more recessionary signal, shares of Dollar Tree, Dollar General, and Walmart have all vastly outperformed the S&P 500 year-to-date. Target? Not so much. The stock has slumped 30% so far in 2025.
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