Dollar General Store and Dollar Tree Store
Share Dollar General When Dollar tree As discounters exceeded Wall Street’s quarterly earnings forecast, it surged on Thursday, raising the outlook for next year and talking about consumers flocking to lower prices during the inflationary period.
As of noon on Thursday, Dollar General’s share had risen by about 14% and Dollar Tree had risen by about 20%.
The two retailers said they believe there is an opportunity to grow as Americans place more emphasis on value in their purchasing decisions, whether they buy groceries or seasonal decorations. ..
“We’re already starting to see our core customers start shopping more intentionally,” Todd Basos, CEO of Dollar General, said in a phone call with analysts. And we’re starting to see that the next class of customers are also starting to shop with us. ”
Dollar Tree executive chairman Rick Drayling is a consumer to record high gas prices and uncertainties from current events such as the Ukrainian War and pandemics from the highest levels of inflation since the early 1980s. Listed many of the challenges facing. He added that many consumers “live from salary to salary.”
“In difficult times, value retail can be part of a solution to help families grow the dollar to meet their evolving needs,” he said.
Dollar General and Dollar Tree exceeded expectations for first-quarter revenue, revenue and same-store sales.
Dollar Tree, which includes the Family Dollar banner, said it expects net revenues to range from $ 27.76 billion to $ 28.14 billion this year, compared to previous forecasts of $ 27.72 billion to $ 27.85 billion. I did.
Dollar General said it expects net sales growth of about 10% to 10.5% compared to the previous forecast of about 10%. We have raised our existing store sales forecast from the previous forecast of 2.5% to 3.5%.
Here are three key points from the first quarter financial statements of the two discounters:
Shoppers are still in the store, but are buying another item. Food occupies the majority of the basket and drove sales for Dollar General and Dollar Tree in the first quarter.
A year ago, consumers had extra money from stimulating checks and child tax credits. That meant some bounces for impulsive items and discretionary purchases. Those dollars have disappeared and other budget items such as groceries and gas have become more expensive.
According to Vasos, Dollar General’s same-store sales declined in the seasonal, apparel, and household items categories in the first quarter, but more consumables were sold. Overall, same-store sales were down 0.1% year-over-year, ahead of analysts’ expectations of 1.3%, according to FactSet.
At Dollar Tree, sodas, salty snacks, and cookies were some of the most popular items. In particular, retailers have expanded their food and beverage assortment. The company is the parent company of Family Dollar and is a banner that is heavily biased towards food compared to the banner of the same name.
“We believe that this is the driving force of traffic and will help drive traffic over time, not only to these categories, but to the entire store as customers experience the item and appreciate the value we offer. “We do,” said Michael Witynski, CEO of Dollar Tree. He told the analyst.
Even before inflation jumped to 40-year highs, Dollar Tree and Dollar General planned strategies to attract larger store footprints, expand into new categories, and attract more customers. .. On Thursday, retailers doubled it — said the difficult economic background made the time right and the offerings more attractive.
With over 18,000 stores, Dollar General will open 1,100 new locations this year.Enlarge Its new store concept, PopShelf, And push forward with the addition of more health-related products. By the end of this year, we plan to open up to 10 stores in Mexico to expand globally.
The company is also growing in stores. Chief Financial Officer John Garat called an analyst, calling an analyst that about 800 of the new locations will be in a larger format of 8,500 square feet to store health and beauty items, produce and other groceries. A passage for the cooler will be added.
Dollar General is adding end caps and displays that highlight cheaper own brands and $ 1 products, Basos said. He said the company “saw the acceleration of our private label business” in the last few weeks.
With more than 15,500 stores, Dollar Tree will open 590 stores this year. We are adding a wider range of products by raising the price of $ 1 items to $ 1.25 and adding items with price tags of $ 3 and $ 5. And it brought new executives to turn the Family Dollar Banner around.
Dollar Tree and Dollar General are unaffected by rising costs in the first quarter, and some investors have expressed concern about whether prices can be kept low without compromising profits.
So far, retailers have managed to exceed Wall Street’s earnings expectations, despite rising prices for fuel and freight. That’s what Wal-Mart and Target didn’t do.
According to Vasos, Dollar General can be exchanged for other products or reduced in size if the price of a particular product rises. He said the company has close inventory control to avoid high levels of price cuts and unsold excess items.
Dollar General is working on several other cost-cutting and profit-promoting measures. As of the end of the first quarter, more than 8,000 stores had self-checkouts added. We plan to self-check out about 200 stores this year alone. By the end of the year, it has more than doubled the number of private truck fleets since 2021, accounting for about 40% of outbound transport fleets.and it is Carry more healthcare products, There is more margin than food, such as coughing and cold remedies.
In Dollar Tree, price increases are driving profitability significantly. Retailers announced last year that they would raise the price of dollar goods by a quarter. We have $ 3 and $ 5 items in more stores.
Witynski said the wide range of prices means new sales opportunities during important seasons such as holidays. Dollar General recorded strong sales before and after Easter and Valentine’s Day, and he said similar moves are expected for the new semester, Halloween and the holiday season later this year.