Shares of Dollar General (DG 4.98%) were gaining today, seemingly in response to Walmart's announcement that it would have to raise prices due to tariffs.
Over the weekend, President Donald Trump posted on Truth Social, urging Walmart not to blame tariffs for raising prices and telling it to eat the cost of the tariffs.
Walmart initially sold off on the news on Monday morning, though it had recouped those losses by the afternoon session. As of 2:22 p.m. ET today, Dollar General stock was up 4.6% as investors seem to perceive the attention as a positive for the discount retailer.
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Good news for Dollar General
While Walmart has a number of options for absorbing the cost of the tariffs, Dollar General is likely to be a winner from the former's decision to raise prices, and the more attention it gets, the better it should be for the discount retailer. Dollar General stock also jumped on May 15, gaining 6% after Walmart made the comments on raising prices in its earnings call.
The discount retailer has lost market share to Walmart over the last few years, but a change in pricing dynamics could favor Dollar General.
The discounter also has an advantage over other retailers in a high-tariff regime because it's less exposed to import taxes. According to research from Citigroup, only about 10% of its inventory is exposed to tariffs, and more than 80% of its revenue comes from consumer staples like groceries, paper products, and cleaning products.
What's next for Dollar General
Dollar General stock has outperformed this year, in part because it has benefited from a movement to risk-off stocks during tariff negotiations, and it's also well positioned to outperform if retailers are hit by tariffs due to its limited exposure to import taxes.
The company is still in the process of its own turnaround, and we'll hear more about it soon. The retailer is set to report first-quarter earnings on June 3 with analysts expecting revenue to increase 3.6% to $10.3 billion and earnings per share to fall from $1.65 to $1.47.
