The insight: More middle- and higher-income shoppers are turning to Dollar General, management said, helping the discounter beat Q1 expectations and boost its full-year outlook.

The numbers: Dollar General is one of the vanishingly few retailers to upgrade both its sales and profit outlook for 2025, signaling confidence in its ability to mitigate tariffs and attract customers with its value proposition.

• It now expects net sales to grow 3.7% to 4.7%, up from 3.4% to 3.3%.
• EPS is forecast at between $5.20 and $5.80, a slight increase from its prior guidance of $5.10 to $5.80.
• Same-store sales are expected to rise 1.5% to 2.5%, compared with 1.2% to 2.2% previously.

Key to success: While Dollar General’s core low-income customer is under serious pressure, that’s being offset by growing “trade-in” behaviors from higher-income consumers, who are spending more of their discretionary dollars at the retailer.

• 1 in 4 Dollar General consumers report having less income than the year before, while nearly 60% of its core audience feels they’ll have to sacrifice necessities in the coming year, according to the retailer’s internal surveys.
• Any reduction in spending from those shoppers has been more than offset by an influx of new customers with more disposable income, who are enthusiastically spending beyond the essentials.
• Dollar General saw the “highest percent of trade-in customers we’ve had in the last four years” in Q1, CEO Todd Vasos said, with those shoppers visiting more often and spending more than previous waves of new customers.

Our take: Dollar General is poised to benefit as uncertainty and rising prices drive consumers to prioritize value. While the retailer isn’t ruling out tariff-related price hikes, it—like Best Buy and Target—sees them as a last resort, and one that shouldn’t diminish its price gap relative to competitors.