Is retail actually just fine?

With all the doom and gloom about the state of consumer spending, you may have done a double take after seeing Dollar General pop 15.85% today following a stellar Q1.

The discount chain not only handily beat top and bottom line earnings expectations, but raised its full-year forecast. Management added that the store is attracting more middle- and higher-income consumers as it moves to cut its exposure to China. Dollar General achieved all this amid a chaotic first quarter marked by fears of a recession and a global economy rocked by tariffs.

Overall, Dollar General reported:

• Earnings per share: $1.78, compared to the $1.48 expected
• Revenue: $10.44 billion, higher than the $10.31 projected

“We are pleased to see this growth with a wide range of customers and are excited about our ongoing opportunity,” said CEO Todd Vasos on the company’s earnings call.

What’s going on with retail?

While Dollar General emerged seemingly unscathed from the tariff meltdown, other retailers showed battle scars last quarter. Best Buy, Macy’s and Abercrombie & Fitch all cut their profit outlooks because of the potential impact of tariffs. Meanwhile, American Eagle Outfitters, Deckers Outdoors, and Ross Stores threw up their hands, opting not to provide any full-year forward-looking guidance altogether, arguing that tariffs were raising too many ongoing questions.

That being said, while the future looks murky, last quarter actually…wasn’t so bad. According to an LSEG analysis of the 163 companies in the retail and restaurant industries, Q1 earnings grew by an average of 7.9% from the same period last year, while average revenue jumped 2.9%. Overall, retailers still saw relatively strong demand—although consumers rushing to purchase big-ticket items before tariffs kicked in might be contributing to that.

“The consumer is continuing to react differently than the sentiment,” said Macy’s CEO Tony Spring on the company’s earnings call.

The bottom line: The only certainty continues to be uncertainty, as executives have warned time and time again on earnings calls. The recent ruling by the Court of International Trade last week just adds one more question mark that has yet to be resolved.—LB