As the Q1 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the non-discretionary retail industry, including Dollar Tree (NASDAQ: DLTR) and its peers.

Food is non-discretionary because it's essential for life (maybe not those Oreos?), so consumers naturally need a place to buy it. Selling food is a notoriously tough business, however, as the costs of procuring and transporting oftentimes perishable products and operating stores fit to sell those products can be high. Competition is also fierce because the alternatives are numerous. While online competition threatens all of retail, grocery is one of the least penetrated because of the nature of the product. Still, we could be one startup or innovation away from a paradigm shift.

The 8 non-discretionary retail stocks we track reported a strong Q1. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 37.4% above.

While some non-discretionary retail stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2.9% since the latest earnings results.

Dollar Tree (NASDAQ: DLTR)

A treasure hunt because there’s no guarantee of consistent product selection, Dollar Tree (NASDAQ: DLTR) is a discount retailer that sells general merchandise and select packaged food at extremely low prices.

Dollar Tree reported revenues of $4.64 billion, up 11.3% year on year. This print exceeded analysts’ expectations by 2.4%. Overall, it was a very strong quarter for the company with revenue guidance for next quarter exceeding analysts’ expectations and full-year EPS guidance beating analysts’ expectations.

“Our strong first quarter performance underscores the progress we’ve made against our strategic priorities and is a clear signal that our customers are responding positively to the changes we are making,” said Mike Creedon, Chief Executive Officer.

Dollar Tree pulled off the biggest analyst estimates beat but had the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is up 1.4% since reporting and currently trades at $98.

Is now the time to buy Dollar Tree? Access our full analysis of the earnings results here, it’s free.

Best Q1: Sprouts (NASDAQ: SFM)

Playing on the secular trend of healthier living, Sprouts Farmers Market (NASDAQ: SFM) is a grocery store chain emphasizing natural and organic products.

Sprouts reported revenues of $2.24 billion, up 18.7% year on year, outperforming analysts’ expectations by 1.4%. The business had an exceptional quarter with EPS guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ EBITDA estimates.

Sprouts scored the fastest revenue growth among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 5.6% since reporting. It currently trades at $160.96.

Is now the time to buy Sprouts? Access our full analysis of the earnings results here, it’s free.

Weakest Q1: Target (NYSE: TGT)

With a higher focus on style and aesthetics compared to other large general merchandise retailers, Target (NYSE: TGT) serves the suburban consumer who is looking for a wide range of products under one roof.

Target reported revenues of $23.85 billion, down 2.8% year on year, falling short of analysts’ expectations by 2%. It was a disappointing quarter as it posted full-year EPS guidance missing analysts’ expectations.

Target delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 3.3% since the results and currently trades at $94.99.

Read our full analysis of Target’s results here.

Dollar General (NYSE: DG)

Appealing to the budget-conscious consumer, Dollar General (NYSE: DG) is a discount retailer that sells a wide range of household essentials, groceries, apparel/beauty products, and seasonal merchandise.

Dollar General reported revenues of $10.44 billion, up 5.3% year on year. This result topped analysts’ expectations by 1.7%. Overall, it was a very strong quarter as it also put up an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ EPS estimates.

The stock is up 16.8% since reporting and currently trades at $113.49.

Read our full, actionable report on Dollar General here, it’s free.

BJ's (NYSE: BJ)

Appealing to the budget-conscious individual shopping for a household, BJ’s Wholesale Club (NYSE: BJ) is a membership-only retail chain that sells groceries, appliances, electronics, and household items, often in bulk quantities.

BJ's reported revenues of $5.15 billion, up 4.8% year on year. This number missed analysts’ expectations by 0.6%. Zooming out, it was actually a strong quarter as it produced a solid beat of analysts’ EBITDA and EPS estimates.

The stock is down 7.8% since reporting and currently trades at $108.32.

Read our full, actionable report on BJ's here, it’s free.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.

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