New products and refurbished stores push US dollar chains to boost profit forecasts

(Reuters) – The two major US chains of discount stores announced Thursday their forecast annual profit, adding that new products, ranging from fresh foods to clean brands, were starting to pay off, cushioning the upside tariffs on Chinese imports.

The additional tariffs imposed by US President Donald Trump on Chinese imports of about $ 550 billion announced last week should hurt companies that depend on China to stock up on products.

The two-dollar stores, which are largely sourced in China, are already turning to other sources, with the trade war showing no signs of slackening.

Dollar General said Thursday that he would be able to mitigate the impact of these rates, while his rival said that he was working with suppliers to offset the increase in costs.

Dollar Tree also said it has been able to overcome past tariff negotiations with price reductions, canceled orders and a better product mix.

Dollar forecasts an annual profit of between $ 6.36 and $ 6.51 per share, taking into account the anticipated impact of the rate increase. He had already forecast between $ 6.30 and $ 6.50.

Family Dollar-owner Dollar Tree has predicted annual earnings of $ 4.90 per share at $ 5.11 per share, but added that these forecasts excluded recent rate increases. His previous range was $ 4.77 to $ 5.07.

The company also announced better-than-expected quarterly store sales, as its struggling Family Dollar channel posted its best growth since its acquisition in 2015.

"We have reinstated our main client in the store with Family Dollar and they like what they see," said Dollar Tree CFO Kevin Wampler.

Struck by the competition of supermarkets like Walmart (WMT.N) and an increase in online shopping, companies have added new products on shelves, self-service payment options and sections on frozen products to enhance customer shopping experience.

Graphic: here

Sales at the Dollar General store, which has been open for more than a year, increased by 4% in the published quarter, well above analysts' average estimates, which estimate an increase of 2.43%, according to the data. IBES of Refinitiv.

In recent years, Dollar General has outperformed Dollar Tree, as it has been able to store fresh produce and frozen products more quickly at different prices, which is a key factor for low-income and small-scale buyers. budgets.

"It's hard to break a hole in this report. It was very solid for Dollar General, "said Brian Yarbrough, an analyst at Edward Jones.

Dollar General Corp shares (DG.N) jumped 11% to a record $ 155.98, while those of Dollar Tree Inc (DLTR.O) increased by 4.7%.