The Central Bank of Kenya (CBK) plans to lift its 10-year ban on issuing new banking licenses on July 1.
This change will open the market to fintechs and digital banks, which is expected to increase market competition and, possibly, bank consolidations as small banks are forced to merge or exit the industry.
“Fintechs will drive innovation in the sector, prompting traditional banks to adopt new technologies to stay competitive,” says Anne Kibisu, a banking analyst at Deloitte Kenya.
New and existing banks will face new capital requirements enacted in December 2024 under the Business Laws (Amendment) Act 2024. By 2026, banks will be required to maintain KES10 billion ($77 million) in capital.
This development follows a similar capital increase in 2009, when the requirement was raised from KES250 million to KES1 billion. That change prompted mergers, including KCB’s acquisition of National Bank in 2019. Analysts predict a similar wave of consolidation as smaller banks struggle to meet the new capital targets.
The central bank reports that 12 banks face a combined capital shortfall of KES11.8 billion. To comply with the new requirements, these banks needed to raise KES3 billion by December 2024, KES6 billion this year, and eventually KES10 billion by 2026.
“These increased capital thresholds are designed to help banks absorb economic shocks and continue supporting sustainable growth,” said CBK Governor Kamau Thugge.
Since December 2023, 27 of Kenya’s 39 licensed banks have met the new capital requirement. The remaining 12, primarily smaller banks with limited branch networks, now face significant pressure to recapitalize or merge with larger institutions.
“We are actively exploring strategic partnerships to meet the new capital requirements,” said an executive from an affected bank. “Mergers are also being considered.”
The CBK is expected to guide the consolidation process, as it did during the 2015-2016 banking crisis, which saw the collapse of Imperial Bank and Chase Bank. By 2027, Kenya’s banking sector is expected to be more robust and consolidated.
Jefferies raised its price target for Netflix stock to $1,400, which implies a 15% return from where shares closed Monday and is well above Visible Alpha’s consensus price target.
Netflix is expected to benefit from a lineup of strong releases, future price increases, and improving ad revenue, analysts said.
They estimate Netflix may bring in as much as $10 billion in ad revenue through 2030.
There’s a lot for investors to tune into at Netflix, Jefferies said.
Jefferies reiterated its “buy” rating of Netflix (NFLX) stock Tuesday, saying a solid release lineup, additional price increases and ad revenue are likely to bolster shares.
Analysts raised their price target to $1,400, about 15% above where shares closed Monday. Jefferies’ target is well above the average analyst price target of $1,192 compiled by Visible Alpha that implies a roughly 2% loss.
“We continue to see a favorable catalyst path for NFLX over the short, medium, and long-term,” Jefferies said, adding: “Over the next 5 yrs, we believe NFLX should sustain 20%+ EPS.”
Netflix will likely be able to retain customers in 2025 while cracking down on password sharing and collecting recently raised subscription fees, thanks to “one of the best” release lineups in recent memory, Jefferies said. Anticipated releases include new episodes of Squid Game, Stranger Things and Wednesday, the research note said.
Ad revenue is poised to grow in the coming year, and potentially create a “$10B opportunity through 2030,” Jefferies said.
To enhance their competitive advantage, they are placing a growing emphasis on innovation and driving business growth. The findings come as artificial intelligence (AI) is emerging as a crucial technology for banks, and demand for the technology is expected to become fierce.
Strategic priorities have shifted
European banks are shifting strategic priorities from reducing costs to innovation and growth. Investments are focused on scaling AI and cloud capabilities, accelerating digital transformation to enhance customer and employee experiences, and positioning for long-term competitiveness.
AI: From emerging promise to a reality
AI has transitioned from a promising concept to a foundational element in European banking operations. Banks are leveraging AI primarily to enhance fraud detection and elevate customer service, two critical areas given the region’s stringent regulatory environment and the imperative to safeguard financial integrity. Approximately 28% of European banks cite fraud detection and customer service as domains where AI delivers the highest value.
AI-powered chatbots and virtual assistants are streamlining interactions, enabling personalised, real-time customer engagement while optimising operational costs. Yet, the journey is ongoing: nearly half of AI initiatives remain in early stages, hindered by data management challenges and regulatory complexities. This signals a clear mandate for banks to strengthen data architectures and governance frameworks to unlock AI’s full potential.
Banks see the most impact from AI in enhancing productivity, quality, growth, and operational speed. Generative AI alone could add between $200 billion and $340 billion annually to the banking sector through productivity gains. Leading banks are already realising these benefits: ABN Amro uses generative AI to summarise customer calls, boosting contact center efficiency, while JP Morgan has reduced payment validation errors by up to 20% using AI-powered models, cutting fraud and operational costs.
At Infosys, we are witnessing firsthand how AI-driven innovation is transforming software development productivity, with improvements ranging from 7% to 15%. Nearly 18,000 developers have collectively generated nearly 7 million lines of code, supported by AI assistants tailored to their specific roles and functions. This AI-first approach enables us to optimize operations significantly, enhance predictive capabilities to stay ahead of market shifts, accelerate growth trajectories, and strengthen risk management frameworks, including compliance, ensuring our clients remain resilient in an evolving financial landscape.
Data, security, and compliance are what hold banks back
Data privacy and security remain the foremost challenges to AI and cloud adoption. Banks must navigate complex regulatory landscapes while ensuring robust data protection. Interestingly, while over half of European banks consider their data architecture AI-ready, they face the most challenge in implementing AI in their data architecture.
Security concerns also dominate cloud migration decisions. Strong governance, encryption, and compliance frameworks are essential to safely manage sensitive customer data.
Innovation drives customer loyalty
Historically, a bank’s size and reputation anchored customer trust; however, today’s customers prioritise convenience and relevant offerings. The demand for technology talent, particularly in AI and cloud infrastructure, is intensifying. Cybersecurity remains a critical focus, but the rapid growth in AI and cloud roles underscores the sector’s commitment to building robust digital expertise. To meet these demands, banks must harness powerful technology and skilled talent capable of driving ongoing innovation.
Unfortunately, recruiting tech talent — especially in AI — remains a significant hurdle for many banks in the region. The competition for skilled professionals is fierce due to the increasing presence of global banks are vying for the same talent pool.
Many banks are investing heavily in reskilling initiatives to address this talent gap. Governments are doing their part too to bridge the talent gap. For example, the European Commission’s AI Continent Action Plan aims to make Europe a global AI leader by expanding AI education and training. The Commission has launched the AI Skills Academy, which offers specialised education in AI and generative AI, apprenticeship programs, and scholarships to increase diversity and attract talent back to Europe. The plan also promotes European Digital Innovation Hubs to provide accessible AI skills and training services across the EU, supporting worker upskilling and reskilling.
Strategic partnerships: a catalyst for talent development
Banks must consider forming strategic partnerships with educational institutions and technology firms to tackle these challenges effectively. Collaborations can lead to tailored training programs that address specific industry needs. For example, BNP Paribas collaborates with AI startups and invests heavily in AI talent development through its Digital Data and Agile Academy, providing employees with ongoing data and AI skills training. The collaboration by European Social Partners on Employment Aspects of AI will help European banks responsibly navigate AI-driven transformation, safeguarding employee well-being and enabling sustainable adoption of AI.
Additionally, partnerships can facilitate the rapid adoption of new technologies while minimising risks associated with being the first movers in innovation. Lloyds Banking Group has partnered with the University of Cambridge to provide AI training for 300 senior staff as part of its technology transformation, delivering a program called “Leading with AI” that covers AI regulation, ethics, generative AI, and emerging concepts.
Partnerships are critical enablers for institutions to accelerate technology adoption while effectively managing the risks that come with being first movers. At Infosys, we recognize that bringing together diverse perspectives and expertise fosters innovation through meaningful collaboration and idea exchange. With over 270,000 employees who are generative AI-aware across all functions, not just engineering, we cultivate cross-functional teams that leverage varied experiences and insights. This diversity of thought drives richer, more inclusive outcomes that better serve our broad communities and positions us to lead confidently in the evolving AI landscape.
Digital transformation: a path to growth and efficiency
This year is poised to be transformative for European banking. Institutions equipped with effective digital transformation strategies will be able to expand their AI and cloud capabilities. By doing so, they will enhance operational efficiencies and improve customer experiences across all touchpoints to attract and grow their customer base and solidify their competitive edge within the market. While data privacy, security, and regulatory compliance challenges persist, banks that strategically invest in digital capabilities and balance innovation with risk management will emerge stronger and more resilient. Continuous training and collaboration will also remain paramount as banks strive for leadership within the European financial sector.
The Infosys Bank Tech Index is a survey-based research study of nearly 400 global banks that tracks the intricacies of how banks’ priorities across regions differ, where they spend their budgets on technology, and what skills they are looking for.
Jay Nair Executive Vice President and Industry Head for Financial Services in Europe, Middle East, and Africa| Infosys
About The Author
Jay Nair is the Executive Vice President and Industry Head for Financial Services in Europe, Middle East, and Africa. Additionally, he leads the UK Public Service business for Infosys. He is also part of the Supervisory board for Stater.ni (which is largest independent end-to-end service provider for the mortgage market in the Benelux).
He has spent close to three decades in Engineering -both in process control engineering and since 1999, within the BFSI (Banking, Financial Services and Insurance) sector. Jay has extensive experience in Business and Technology Consulting, Practice development, Engineering and Largescale enterprise-wide technology program management. He has led global teams and programs around in the Americas ,Europe ,India, China ,LATAM, and the Asia Pacific.
He has post graduate qualifications in both Software Engineering as well as Business Management.
Ollie’s Bargain Outlet reported better first-quarter sales and profits than analysts had expected on Tuesday.
The retailer’s CEO said the company is “well positioned to benefit” as consumers look for value.
In the first quarter, Ollie’s converted 18 of the 40 former Big Lots locations it acquired in a bankruptcy auction.
Discount retailer Ollie’s Bargain Outlet Holdings (OLLI) beat estimates for the first quarter on Tuesday and lifted its sales projections for the full year.
The retailer said Tuesday it generated $576.77 million in revenue for the quarter along with $0.75 in adjusted earnings per share, each better than analysts had expected. Comparable store sales also rose by 2.6%, a larger gain than the 1.54% analyst consensus compiled by Visible Alpha.
“As consumers seek out value and the current environment weighs on retailers and suppliers, we believe we are well positioned to benefit,” CEO Eric van der Valk said.
The company affirmed its full-year adjusted EPS outlook of $3.65 to $3.75, while lifting its sales outlook to a range of $2.58 billion to $2.60 billion, up from $2.56 billion to $2.59 billion previously.
Ollie’s opened 25 locations in the quarter, 18 of which were former Big Lots locations that the company acquired through auction after Big Lots went bankrupt last year. Last quarter, Ollie’s said it acquired 40 total locations through the auction, putting its target at opening 75 total locations this year.
Despite beating on the top and bottom lines, shares of Ollie’s were down slightly on Tuesday.
Morocco has surpassed South Africa as the leading host of data centers in Africa, with 23 facilities.
The North African kingdom has adapted quickly to the digital age. In 2020, the Agency for Digital Development published a roadmap listing digital infrastructure as a priority. Since then, incentives have been put in place for the sector, including tax cuts and exemptions in the National Charter of Investment. The desire for data sovereignty has also contributed to the boom in data centers. A 2021 law ordered all sensitive data to be hosted within Morocco’s borders, which led to data repatriation.
Currently, most data centers are owned by telecom companies like Maroc Telecom and Inwi or by data center operators like Medasys and N+One. Most large banks also have one, while smaller banks lease data storage space.
Regional governments compete by offering different incentives. Casablanca-Settat and Rabat-Salé-Kénitra boast the most data centers. The full internet penetration rates of these urban centers and energy availability are key for these sites. Other regions are catching up, too. Last year, American firm Iozera signed a $500 million deal to build a data center in Tetouan.
“Datacenter location decisions are driven by a complex interplay of factors, including proximity to business hubs, regional infrastructure capabilities, and long-term operational sustainability. The industry naturally gravitates toward areas that optimize these variables,” says Doha Ammour, vice president of International Business Development at N+ONE Datacenters.
The digital wave in Morocco doesn’t stop at data centers. Developments in fintech, AI, and even e-government initiatives, like Digital Morocco 2030, were recently showcased at April’s 2025 Gitex Africa tech expo in Marrakech. The event drew over 1,400 exhibitors and received over 45,000 visitors and delegates from over 130 countries.
The saying goes, “Data is the new oil.” Data must also be refined and properly stored. However, unlike oil, data is infinite and even self-replicating, so the demand for data services will continue to increase.
Pinterest shares rose in premarket trading Tuesday after JPMorgan analysts upgraded their rating and lifted their price target on the social media stock.
The analysts lifted the stock to “overweight” from “neutral,” and bumped their price target to $40 from $35.
The analysts said Pinterest is improving its user numbers and ad technology, both of which should help drive revenue.
Pinterest (PINS) shares rose in premarket trading Tuesday after JPMorgan analysts upgraded their rating and lifted their price target on the social media stock.
The analysts lifted the stock to “Overweight” from “Neutral,” and bumped their price target to $40 from $35. That brings JPMorgan in line with most other analysts covering the stock who are tracked by Visible Alpha, as 16 call it a “Buy” and just four a “Hold,” with an average price target of $39.75.
They noted that while Pinterest shares are up since the start of the year, they are still about 18% below their February highs while the S&P 500 has recovered to just about 3% below its February record level that month.
Analysts See Pinterest Improving User Growth, Ad Platform
Pinterest is “leveraging its full funnel ad approach and automation/AI capabilities—including Performance+—to capture a greater share of ad spending” from advertisers with $1 billion to $30 billion in annual revenue, the analysts wrote. Some larger advertisers are already spending 5% to 10% of their advertising budget on the platform, they added.
The social media platform is growing its monthly active users (MAU) base, with 85% coming directly to Pinterest through its mobile app, the analysts said. They cited that number as a key reason for their upgrade, as Pinterest generates roughly 90% of its revenue through its app, “which limits PINS’ exposure to Google & broader overall search disruption,” they wrote.
Pinterest shares, which entered the day up 10% this year, rose 4% less than an hour before the opening bell.
By concentrating on financial inclusion, Latin America shows other parts of the world how to navigate testing times.
The IMF estimates that Central America will grow by 3.9% this year, the Caribbean is predicted to see a tourism bounce, and the region is setting global standards, according to Boston Consulting Group’s managing director, Saurabh Tripathi.
“Like many emerging markets, Latin America is a hotbed of financial innovation,” said Tripathi to Costa Rican newspaper La República. “In fact, some of the most cutting-edge developments in global banking originate [in Latin America]. These aren’t just regional success stories, but global benchmarks. Latin America is leading by example, and the world is paying attention.”
Tripathi cited two examples: Nubank, which started in Brazil and has spread to Colombia and Mexico. Nubank passed 100 million customers in May 2024 and has a market capitalization of $56.6 billion. Meanwhile, the Central Bank of Brazil’s Pix payment platform has transformed the nation’s instant payments system with more than 155 million users, 15 million companies, and over 6 billion transactions monthly. In 2024, Pix had a 53% year-on-year growth and surpassed credit card transactions.
However, Tripathi warned that more than 50% of the total capital invested in the world banking sector is trading below its value. This suggests that banks are not generating enough returns to cover capital costs, which in turn means they cannot enact societal transformation.
“We are on the verge of a banking revolution that will redefine how banks operate, how they serve society, and how they build trust,” he added.
In March, Brazilian bank Itaú unveiled instant global payments, and the latest unicorn in the region is Mexican digital bank Plata, which raised $160 million in Series A funding led by New York-based Kora that valued the two-year-old company at $1.5 billion.
Bolivia, Chile, and Ecuador have fielded projects ranging from financial inclusion to client experience, which won awards during the Fintech Americas Miami conference in March.
Other regional entities that received multiple awards include Grupo AutoFácil, BAC, Banco Atlántida, BBVA, BCP, Citi, Davivienda, and Santander.
Signet Jewelers shares are jumping in premarket trading Tuesday after the jewelry retailer posted better-than-anticipated quarterly results and issued a rosy full-year outlook.
The owner of Zales, Jared, and Kay Jewelers said the new guidance for the full year reflected both tariffs and cost savings.
Signet shares are soaring 13% in premarket trading but are down 17% entering Tuesday.
Signet Jewelers (SIG) shares are jumping in premarket trading Tuesday after the jewelry retailer posted better-than-anticipated quarterly results and issued a rosy full-year outlook.
The owner of Zales, Jared, and Kay Jewelers reported first-quarter 2026 adjusted earnings per share (EPS) of $1.18 on revenue of $1.54 billion. Analysts polled by Visible Alpha expected $1.03 and $1.52 billion, respectively.
Signet forecast full-year sales in the range of $6.57 billion to $6.80 billion, versus $6.53 billion to $6.80 billion previously. The midpoint of $6.69 billion exceeds estimates of $6.68 billion, as per Visible Alpha. The company also projected adjusted EPS in the range of $7.70 to $9.38 versus $7.31 to $9.10 previously, with the midpoint of $8.54 exceeding the $8.23 forecast.
“Given our positive performance, we are increasing the low end and maintaining the high end of our Fiscal 2026 operating guidance,” Chief Operating and Financial Officer Joan Hilson said. “This outlook reflects the current macro environment and current tariffs as well as on track cost savings initiatives.”
Hilson added that the company was lifting its adjusted EPS outlook “to reflect the repurchase of more than 5% of outstanding shares year to date.” The company forecast second-quarter sales in the range of $1.47 billion to $1.51 billion, with the midpoint of $1.49 billion exceeding analysts’ estimates of $1.48 billion.
Signet shares are soaring 13% in premarket trading but are down 17% for the year entering Tuesday.
Where’s the US dollar headed next? To put it simply, for decades, its movement has largely hinged on two forces, global growth cycles and Federal Reserve (Fed) tightening. Before the financial crisis, strong global expansion fueled risk-taking, drawing capital away from the U.S. The BRICS era amplified this trend as investors sought international assets. Meanwhile, Fed rate hikes have consistently shaped dollar dynamics. But today, shifting portfolio flows and unexpected asset allocation patterns suggest it’s time to rethink this traditional framework.
Lately, worries about US asset safety, especially long-term bonds, have gained traction. Over the past decade or so, the “U.S. exceptionalism” era saw heavy global investment in American equities, fixed income, and ETFs. Now, international players are pulling back. While this isn’t a full retreat from the dollar, it hints at a strategic shift in portfolio management as exposure to US assets is intentionally trimmed, a cautious recalibration by major institutions.
Several forces are reshaping investor sentiment. Tariffs have unsettled confidence, while speculation swirls about China offloading treasuries. In reality, China has simply reduced its purchases over the years, diversifying its holdings. The bigger moves, however, are coming from traditional allies, Canada and Europe, whose treasury investments eclipse China’s. Their retreat from US assets isn’t abrupt but rather a measured shift driven by multiple factors, including hedging strategies. This transition isn’t easily seen in the data, as institutional investors are hedging US exposure rather than dumping portfolios outright. Instead of bulk selling, they sell USD forward while buying CAD or EUR forward. Then, they gradually fine-tune their positions to trim underlying dollar-denominated asset exposure. Is this trend coming to an end? Tough to say, but the relentless slide in the US dollar over the past four months largely traces back to heavy futures market selling by key US trading partners. Their positioning suggests a deeper recalibration rather than just short-term fluctuations, hinting at broader shifts in global portfolio strategies.
What could influence the dollar’s trajectory in the coming weeks?
Section 899 tax provision. Investor focus is locked on the House tax bill, which appears to raise rates on US assets linked to nations imposing ‘unfair foreign taxes.’ This could translate into higher withholding taxes on US-sourced interest, dividends, and FDAP income, potentially climbing to 20%, adding another layer of pressure to the already bearish sentiment surrounding the dollar.
The evolving fiscal backdrop remains a key factor, amplifying doubts about the dollar’s stability. While historically stimulus efforts fueled risk asset rallies and supported the USD, sentiment is shifting. Investors are growing increasingly wary of persistent deficits, which now inject an added dose of unpredictability into market dynamics.
Front-loading effect. Recent import payments have fueled capital outflows, straining the U.S. current account and weighing on the dollar. This intensified selling pressure has contributed to its recent weakness. However, as payment cycles normalize, this trend is expected to reverse in Q2, potentially easing downward pressure on the currency.
Euro bulls charge amid U.S. woes
Antonio Ruggiero – FX & Macro Strategist
With renewed trade tensions weighing on U.S. sentiment, the euro surged to its highest level since late April, when EUR/USD briefly broke above $1.15. Yesterday, the pair reached an intraday high of $1.1450, driven by disappointing U.S. PMI data—where the manufacturing index contracted further, slipping from 48.7 to 48.5 in May.
The resurgence in bullish momentum saw hedge funds reinstating aggressive bets on euro strength, reversing last week’s trimming of topside bullish bets as optimism had faded. However, on a one-month horizon, sentiment remains subdued, with today’s risk reversal levels still below the one-month average. Trump’s latest tariff threat—doubling levies on steel and aluminum to 50%—has drawn swift criticism from the European Commission, which warned that it undermines efforts to resolve the dispute. With a July 9 deadline looming, the EU has signaled it is prepared to retaliate if an agreement is not reached.
EU trade chief Maros Sefcovic will meet U.S. Trade Representative Jamieson Greer in Paris on Wednesday, while a separate Commission delegation heads to Washington for continued discussions.
Looking ahead, market participants are closely watching JOLTS data tomorrow and Friday’s NFP release, as these could further reinforce the string of weak U.S. economic prints from the past week. Given that U.S. news flow remains the key driver of euro strength, EUR/USD could end the week above $1.14, as bearish euro-specific drivers—such as the ECB rate cut and soft Eurozone CPI—appear to be largely priced in.
Banxico remains dovish
Kevin Ford – FX & Macro Strategist
Banco de México (Banxico) last week released the minutes of its May 15 monetary policy meeting, where the board unanimously decided to cut the reference rate by 50 basis points for the third consecutive time, bringing it to 8.50%. The board’s stance remains dovish, anticipating that economic slack will ease inflationary pressures.
The minutes reinforce signals that further cuts could follow despite rising inflation, with policymakers citing expectations of weaker economic growth. The board’s forward guidance suggests continued monetary policy adjustments at a similar pace. Officials appear confident that disinflation will resume amid slowing economic activity, while Q2 growth is expected to soften as temporary Q1 drivers fade.
Reflecting Mexico’s broader economic challenges, its manufacturing PMI painted a similarly bleak picture yesterday. The index edged up from 44.8 in April to 46.7 in May, according to S&P Global, but remained in contraction for the 11th consecutive month.
Manufacturers continued to struggle with pressure on both supply and demand, with new orders declining for the 11th straight month, partly due to U.S. tariffs. Export activity saw its sharpest drop since early 2021, while purchasing slowed at the fastest rate since late 2020, underscoring lingering concerns over weak demand.
Eying fresh 2025 highs
George Vessey – Lead FX & Macro Strategist
Sterling’s price action at the start of the week has been reminiscent of April in that it is being driven mostly by external pressures and FX flows and hence EUR/USD’s surge higher has dragged GBP/EUR towards €1.18 but pushed GBP/USD back above $1.35. The dollar continues to struggle when trade tensions escalate, and early signs point to renewed pressure as geopolitical uncertainties resurface at the start of the week.
The pound has logged four consecutive monthly gains against the dollar, fueling prospects for further upside – especially if investors persist in scaling back dollar exposure amid US policy uncertainty. A move toward $1.40 in the second half of this year remains on the radar, provided macroeconomic conditions align favorably. Key drivers will likely include shifts in rate expectations, geopolitical developments, and broader risk sentiment.
On Monday, UK manufacturing PMI for May was revised up to 46.4 from an initial estimate of 45.1, slightly improving on April’s 45.4 reading. Despite this adjustment, however, the sector continued to struggle with challenging operating conditions. Weak global demand, volatile trading environments, and rising costs weighed on production, new orders, export business, and employment. Final services and composite PMI numbers are due tomorrow.
In terms of positioning – CFTC data indicate hedge funds remain long on the pound, edging closer to year-to-date highs. Meanwhile, real-money investors, though still net short, have eased their bearish stance to the most balanced level since November. Overall, there appears to be room for building pound long positions, with no signs of immediate exit pressure across the board.
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
Shares of Dollar General (DG) jumped in premarket trading Tuesday after the discount retailer posted better-than-expected first-quarter results and lifted its full-year outlook.
Dollar General reported earnings per share (EPS) of $1.78 on net sales that increased 5% year-over-year to $10.44 billion. Analysts surveyed by Visible Alpha had projected $1.47 and $10.26 billion, respectively. Same store sales rose by 2.4%, roughly double the 1.22% bump analysts had forecast.
Dollar General CEO Todd Vasos said the company is “uniquely well-positioned to serve our customer in a variety of economic environments,” noting that it gained market share growth across merchandise categories and both its core customer base as well as “trade-in customers.”
The retailer lifted its outlook from what it laid out last quarter. The company raised the floor of its full-year EPS forecast by 10 cents to a range of $5.20 to $5.80; increased its net sales growth projection to 3.7% to 4.7% from 3.4% to 4.4%; and sees same-store sales growth of 1.5% to 2.5% compared with the prior 1.2% to 2.2%.
Dollar General ‘Has Plans in Place’ to Mitigate Higher Tariffs
The company said that “uncertainty exists for the remainder of the year regarding the potential impact of tariffs on the business, and particularly on consumer behavior,” and added that it “has plans in place” if tariffs on China and other countries return to their April 2 levels. Dollar General expects it will be able to mitigate most of the cost increases brought on by tariffs, but said “consumer spending could be pressured by tariff-related price increases.”
Dollar General shares were up 8% immediately following the report’s release. They entered the day up about 28% since the start of the year.
Discount store rival Dollar Tree (DLTR) is scheduled to report its own first-quarter earnings Wednesday morning. UBS analysts said in a recent note that they believe there are “more tailwinds than risks and uncertainties” for dollar stores in the current environment, citing consumers looking to trade down as a key benefit.
