Dollar Tree boss says even high-income consumers are turning to the budget retailer

Dollar Tree hiked its annual sales and profit forecasts as a growing number of Americans — including higher earners — turned to the budget retailer amid uncertainty over tariff-related cost increases.

Comparable second quarter sales rose 6.5%, beating estimates of a 4.9% increase, as more people visited Dollar Tree stores and spent more each visit. Chief executive Mike Creedon said it had been a “volatile” quarter, but that “customers are seeking value and convenience more than ever.” He added on a call with journalists: “Dollar Tree has always thrived in tough times.”

Discount retailers are capitalizing on a period of economic unease. Consumer confidence slipped in August as Americans grew more anxious about the job market, tariffs, and stubbornly high prices. More people now expect a recession within the next year, the Conference Board said last month.

That uncertainty is shaping shopping behavior. With grocery bills climbing and tariffs filtering into everyday goods, households across income levels are turning to discount chains for relief — a shift that has played to Dollar Tree’s strengths.

Dollar Tree is one of the biggest budget retailers in the U.S. with 16,500 stores across North America. The company, which is known for its “everything for $1.25” model, said it was increasingly attracting richer consumers.

Creedon said: “While sales growth was strong across all income cohorts, we continue to see especially strong performance from middle and higher income customers, with households earning over $100,000 per year providing a meaningful portion of our q2 growth.”

The earnings report comes after fellow discounter Dollar General also raised guidance last month, citing similar reasons for more consumers seeking bargains.

However, Dollar Tree continued to see headwinds from tariffs, and Creedon pointed to higher levies in China, Vietnam, India and Bangladesh as pinch points.

“Tariffs remain a source of ongoing volatility and operating in an environment where rates change frequently remains one of our largest challenges,” Creedon said.

He added the company had raised prices in response to the levies in some instances but said it was a “last resort,” coming alongside other measures like renegotiating with suppliers, and that the effect on sales had been less than expected.

Creedon said he still expects the firm to mitigate most of the impact over the coming year. Dollar Tree increased its annual earnings per share guidance to $5.32 to $5.72, from an earlier forecast of $5.15 to $5.65 per share.