A new job or raise landed over the past year doesn't seem be leading people in the U.S. back to spending like they did during the 2004-2007 economic boom.
In fact, judging by the strong first-quarter results from the nation's dollar stores, U.S. consumers have embraced a mindset of thrift. Dollar General (DG) - Get Report , which operates more than 12,700 stores across 43 states, notched a solid 2.2% same-store-sales increase in the first quarter. Both customer traffic and the average amount spent by a shopper increased. Sales jumped in all areas of Dollar General's businesses, led by demand for consumable goods, such as paper towels and home-cleaning products. Sales in the company's consumables segment, which represents more than 76% of its total business, rose 8% from the prior year.
Dollar General's earnings came in at $1.03 a share, up 23% year over year, and smashing through Wall Street estimates for 94 cents a share. "In an environment where many retailers struggled, we delivered good performance," boasted Dollar General CEO Todd Vasos on a call with analysts. Interestingly, Dollar General isn't solely finding good performance among penny-pinching senior citizens and those on food stamps. Pointed out Vasos, "The millennial shopper is a segment that I was particularly excited to see emerge as a core consumer for Dollar General, as this segment is so important to the future of retail and Dollar General."
According to Dollar General, female millennials make up about 12% of the chain's shoppers and 24% of its overall sales. On average, says Dollar General, the female millennial -- who often does the shopping for her family -- is in its stores three times a month. "She wants healthy food items and likes to be on the cutting edge and try new products. And while national brands are important, she also trusts our private brands and utilizes the entire Dollar General store as a way to stretch her budget."
So one could now add cash-strapped millennials counting the days to get their baby boomer parent's retirement savings as dollar store regulars.
Dollar Tree, which has about 14,000 total Family Dollar and Dollar Tree locations in the U.S., said first-quarter earnings rose 25% to 89 cents a share. Wall Street had anticipated 81 cents a share. Same-store sales rose 2.3%, due to higher levels of customer traffic and more spending per customer, similar to what transpired at Dollar General. Top-performing categories for Dollar Tree included household products, candy and food, snacks and beverage and party supplies.
"Dollar Tree continues to be part of the solution for millions of consumers as they work hard to balance their household budgets, and we serve a very loyal and growing customer base," Dollar Tree CEO Bob Sasser said on a call. Dollar Tree lifted its full-year sales guidance to a range of $20.79 billion to $21.08 billion from $20.76 billion and $21.11 billion previously. Earnings are now seen in a range of $3.58 to $3.80 a share compared to a prior outlook for $3.35 to $3.65 a share.
Each dollar store also serves a loyal and growing shareholder base, too.
Despite disappointing first-quarter results from big-name U.S. retailers, such as Macy's (M) - Get Report , J.C. Penney (JCP) - Get Report and Target (TGT) - Get Report that have cast a cloud over retail stocks, shares of Dollar General and Dollar Tree are up about 24% and 15%, respectively so far this year. Shares of both were sent much higher in response to their first-quarter results.
Dollar stores even managed to outperform two notable discounters in the first three months of the year.
Walmart U.S. (WMT) - Get Reportsaw same-store sales increase 1%. The world's largest retailer logged success in most areas of its store, including apparel, health and wellness and groceries. As for Target, its same-store sales gained 1.2%, spurred by strength in the kids and health and wellness departments.