Discount Retailers Gain Momentum as U.S. Consumers Double Down on Savings

Discount retailers are once again in focus. In early December, several publicly traded U.S. discount and fixed-price retail chains reported solid quarterly sales growth, highlighting a broader shift in consumer behaviour toward value-oriented shopping.

Dollar Tree Posts One of Its Strongest Quarters in Years

Dollar Tree, one of the largest fixed-price retailers in the United States, delivered one of its strongest third quarters in recent years. The company also reported a record Halloween season in 2025.

Net sales rose 9.4% year over year to $4.7 billion in the third quarter. Comparable-store sales increased by more than 4%, driven primarily by a 4.5% rise in average ticket size, despite a slight 0.3% decline in customer traffic. Operating income grew 3.8% year over year to $343 million.

The company raised its full-year 2025 adjusted earnings-per-share guidance to a range of $5.60–$5.80, up from its previous forecast of $5.32–$5.72. Dollar Tree shares are up roughly 65% year to date.

Dollar General Sees Strong Profit Growth

Dollar General also reported solid results for the third quarter. Net sales increased 4.6% year over year to $10.6 billion, while comparable-store sales rose 2.5%, driven entirely by higher customer traffic. Average ticket size remained flat.

Operating profit jumped 31.5% to $425.9 million, while earnings per share surged 43.8% to $1.28. The company raised its full-year sales growth outlook to 4.7–4.9%, up from a previous range of 4.3–4.8%, and increased its comparable-sales forecast to 2.5–2.7%. Updated EPS guidance now stands at $6.30–$6.50, compared with the prior range of $5.80–$6.30.

Dollar General shares have risen more than 80% since the start of the year.

Five Below Delivers Accelerating Growth

Five Below posted the fastest growth among the major discount chains. Third-quarter net sales climbed 23% year over year to $1.04 billion, while comparable-store sales surged 14.3%.

The company reported operating income of $43.3 million, compared with an operating loss of $0.6 million a year earlier. Five Below raised its full-year 2025 revenue forecast to $4.62–$4.65 billion, up from a prior range of $4.44–$4.52 billion, and lifted EPS guidance to $5.51–$5.69 from $4.56–$4.96.

Shares of Five Below are also up more than 80% year to date.

Saving Becomes a Long-Term Trend

Discount retailers are benefiting from a broad-based push toward savings as higher living costs continue to weigh on household budgets. Despite headline inflation easing to 2.7% in November, cumulative price increases remain significant.

Over the past five years, food prices in the United States have risen by more than 25%. Housing, utilities, transportation, and childcare costs have also increased sharply, while median income growth has lagged behind cumulative inflation.

Notably, demand for discount retail is increasingly coming from higher-income households. According to management commentary cited by Axios, around 60% of Dollar Tree customers now earn more than $100,000 annually, with an additional 30% earning between $60,000 and $100,000. Executives at Dollar General have also pointed to disproportionately strong growth among higher-income shoppers.

This shift suggests that value-oriented shopping is no longer limited to lower-income consumers. Instead, it reflects a deeper and potentially lasting change in purchasing habits, as households across income levels optimise spending and prioritise affordability.

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell securities.