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Dollar General boosts earnings guidance amid inflation

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Yahoo Finance Live anchors discuss first-quarter earnings for Dollar General.

Video Transcript

JULIE HYMAN: And then we actually saw that sort of reflected in the Dollar General and Dollar Tree numbers as well. Dollar General, for example, saw a 5 and 1/2% drop in home product sales, a nearly 28% drop, actually, in apparel sales, so maybe people are not buying basics from the likes of Dollar General and Dollar Tree-- basic apparel, that is-- but consumable sales up by 9.1%. And you can see those numbers also beat estimates.

JARED BLIKRE: Yeah, and we've been talking with just about every guest we've talked to with retail about the shifting consumer preferences, reorienting from the goods sector to the services sector. And that's what I think we're also seeing play out in a number of these discount retailers. So I, like you, I love to look at Dollar Tree and Dollar General as kind of a proxy. I'm going to pull up the charts here on the YFi Interactive. Here, we have Dollar General over the last 10 years. That's a pretty impressive chart. It is consolidating at the upper end of its range.

Now, if you take a look at what's happened over the last year, this is not necessarily what you want to see. This is a broadening megaphone pattern, perhaps. And it looks like we might want to come down and test 1.75. Hard to say. Overall, this has been a high beta stock, but it's very much levered to inflation. And they have-- it is a dollar store. Now, not everything is $1. I think Dollar Tree, they abandoned their peg a couple of years ago. I call it a peg. But their goal is to sell cheap stuff. I think Dollar General also has a broader mix of fresh produce and things like that.

JULIE HYMAN: Right, they've been expanding that. Just a very quick mention of Dollar Tree while we're at it, it's actually somewhat surprising to me the Dollar Tree is up as much as it is this morning because the company's forecast was pretty lousy, actually. Earnings per share last quarter did beat analysts' estimates. And the company saw about a 6 and 1/2% gain in its net sales. If you look at the forecast, though, for the second quarter, it's looking for earnings per share of, at most, $1.55. Analysts have been looking for $1.73. And sales kind of at the midpoint of what analysts have been looking for. So, go figure with that one.

JARED BLIKRE: Go figure.