In recent times of economic uncertainty, Dollar Tree (DLTR) is experiencing an increase in customers, as people across various income levels look for ways to maximize their budgets. During a recent conference call, CEO Michael Creedon stated that the surge in customers has led to boosted sales and an expanded market share. For the quarter ending on February 1, the company saw a 0.7% increase in retail traffic and the average transaction value grew by 1.3% year-over-year. Creedon was quoted saying, “It isn't important how much money you earn, everyone is finding it hard at the moment. Thankfully, Dollar Tree and Family Dollar are a viable solution to these economic pain points.”
Interestingly, Dollar Tree has seen an increase in business from high-income households, while low-income shoppers are relying on the store to ensure they make it to the next paycheck. Creedon shared that roughly 50% of their customers are from the middle-income bracket who traditionally shop for seasonal and holiday goods from them.
The trend of consumers looking to save can be observed across other retailers as well, such as Dollar General (DG) and Target (TGT). To cater to these needs, Target trimmed thousands of prices last year as customers became more frugal. Executives have noted that Americans are now more likely to favor fast-casual eateries over formal dining restaurants, and tend to purchase smaller packages at supermarkets. Walmart (WMT) also reported a growth in its higher-income clientele.
On another positive note, Dollar Tree announced that it estimates a revenue of over $800 million from the sale of Family Dollar to private-equity firms. Meanwhile, shares of Dollar General showed an upward trend, rising by almost 3%.