Discount retailer Dollar Tree is experiencing a significant influx of affluent customers, as new data highlights how rising living costs are driving shoppers from all income brackets to seek better value.
Affluent Shoppers Drive Growth
According to CEO Mike Creedon, who discussed third-quarter results in a call with analysts on Wednesday, the chain welcomed approximately three million more households this quarter compared to the same period last year. Strikingly, about 60 percent of these new patrons came from households earning over $100,000 annually.
"Today, we serve an increasingly broad spectrum of shoppers, from core value-focused households to middle- and higher-income shoppers who are making deliberate choices about how and where they spend," Creedon stated, as reported by The Wall Street Journal.
Spending Patterns and Quarterly Performance
While wealthier consumers are turning to the store for cheaper alternatives, Creedon emphasised that lower-income households are relying on Dollar Tree "more than ever." He revealed that the average spend for lower-income customers grew at nearly twice the rate of high-income earners in the quarter ending November 1.
The CEO, who joined in 2022 as Chief Operating Officer and assumed the top role last year, noted a particular increase in discretionary sales, including home and party decor. Cleaning supplies and personal care items sold steadily, while seasonal products flew off shelves as the holiday period approached.
Financial Results Exceed Expectations
The shift in consumer behaviour translated into strong financial results. Quarterly sales across Dollar Tree's more than 9,000 locations and digital channels surged 9.4 percent to $4.75 billion year-over-year. This figure narrowly surpassed analysts' estimates of $4.7 billion.
The company's third-quarter profit reached $244.6 million, or $1.20 per share, up from $233.3 million, or $1.08 per share, a year earlier. Dollar Tree now anticipates year-end sales between $19.35 billion and $19.45 billion, raising its previous forecast.
This trend of comfortable earners turning to discounters for staples coincides with a 3 percent annual rise in consumer prices. Economists have linked this increase to tariffs and policies from the Trump administration. A recent poll found rising prices remain a top concern for Americans, despite former President Trump's recent comments dismissing affordability concerns as a "hoax."
