Dollar Tree, Dollar General soar as retailers raise forecasts, despite looming tariffs ahead

The outlook as well as a quarterly profit beat eased some concerns around the impact of the Trump administration's latest tariffs on some Chinese imports, including holiday merchandise. Read more...

A customer walks into a Dollar General store near Montpelier, Vermont.

Adam Jeffery | CNBC

Shares of discount retailers Dollar General and Dollar Tree soared in premarket trading Thursday after both companies topped Wall Street expectations for revenue and offered positive forecasts despite trade war concerns.

Dollar General climbed nearly 8% after reporting adjusted earnings of $1.74 per share on $6.98 billion in revenue and raising its full year forecast for earnings and revenue. Analysts expected the company would earn $1.57 per share on $6.89 billion in revenue, according to Refinitiv.

Same-store sales rose by 4% for the Tennessee-based company, compared with a consensus estimate of 2.4% from Refinitiv.

Dollar Tree missed earnings expectations, but its stock rose more than 3%. The company earned 76 cents per share after excluding one-time items. That was shy of the 81 cents per share analysts surveyed by Refinitiv were expecting.

Revenue rose 3.9% to $5.74 billion, and topped the $5.71 billion in revenue predicted by analysts.

The company saw same-store sales rise by 2.4%, compared with a consensus estimate of 1.9%.

Dollar Tree also changed its full-year revenue estimates to between $23.57 billion and $23.79 billion. It previously expected a wider revenue range of $23.51 billion to $23.83 billion. Earnings per share are now predicted to be between $4.90 and $5.11, up from a range of $4.77 to $5.07.

For the third quarter, Dollar Tree expects to earn $1.07 to $1.16 per share on sales of $5.66 billion to $5.77 billion.

The changes in guidance for both companies come as retailers are facing pressure from a new batch of tariffs the U.S. will impose on goods imported from China. The new tariffs, slated to take effect in two rounds on Sept. 1 and Dec. 15, will impact many consumer items.

“The Company is now implementing actions that may mitigate the recently announced tariff increases, and will continue to assess the future impact of those tariffs,” Dollar Tree said.

Thursday’s spike continues a strong year for Dollar General’s stock. The company, which has a market cap of about $36 billion, has gained more than 30% so far this year.

Shares of Dollar Tree, which has a market cap of roughly $24 billion, have risen more than 10% since the start of 2019.