Dollar General Says It’s on Track To Open Roughly 800 Stores This Year

Expansion Plans Come a Day After Rival Dollar Tree Says It’ll Close 1,000 Family Dollar Locations

Dollar General’s expansion plans are proceeding. (CoStar)Dollar General’s expansion plans are proceeding. (CoStar)

Discount retail behemoth Dollar General heralded the arrival of its 20,000th store, and touted plans to open about 800 others this year, just a day after its direct competitor said it is closing roughly 1,000 brick-and-mortar retail locations.

Dollar General, based in Goodlettsville, Tennessee, reiterated its plans Thursday to execute 2,385 real estate projects in fiscal 2024, including the opening of 800 stores, remodeling 1,500 and relocating 85 stores. The retailer hit the 20,000-store mark late last month, when it celebrated the grand opening of its location at 2115 W. Front St. in Alice, Texas. The firm is expanding its capital spending from $1.3 billion to $1.4 billion this year.

Dollar General’s discussion of its aggressive expansion strategy was in contrast to the plans that its competitor, Chesapeake, Virginia-based Dollar Tree, laid out on Wednesday. Dollar Tree said it would shut 1,000 stores, nearly all of them Family Dollar locations with just a few dozen of its namesake locations on the list. The first 600 of those store closings are slated for this year, with the rest coming as store leases expire.

Dollar General and Dollar Tree have a lot in common, facing similar problems with theft and shoppers pulling back on discretionary spending on nonconsumables, which have affected the retailers’ financial results.

“Customers are continuing to feel the impact of the last two years of inflation, which we believe is driving them to make trade-offs in the store,” Dollar General CEO Todd Vasos said on a fiscal fourth-quarter earnings call Thursday. “We see this manifested in the continued pressure on sales in discretionary categories, as well as accelerated share growth and penetration in private brand sales.”

Last year, Dollar General and Dollar Tree ranked No. 1 and No. 2 in U.S. store openings, according to retail analytics firm Coresight Research. But now Dollar Tree is grappling with a challenge that Dollar General doesn’t have, how to turn around the troubled chain it acquired in 2015, Family Dollar. Dollar Tree is working to rid its store fleet of poorly performing and outdated Family Dollar locations.

Opened New Stores

Last year, Dollar General opened 987 new stores, remodeled 2,007 and relocated 129. This year’s store openings will include 30 Popshelf-format locations and up to 15 stores in Mexico, according to Vasos. Popshelf offers mostly nonconsumable goods, “and as such, is more heavily impacted by a softer discretionary sales environment,” he said.

Dollar General is bigger than Dollar Tree, which had 16,774 stores as of Feb. 3. On an earnings call on Wednesday, Dollar Tree CEO Rick Dreiling said the company will continue to open stores this year, most of them Dollar Trees not Family Dollar, but did not provide details beyond that.

For the fourth quarter, Dollar General reported net sales decreased 3.4% to $9.9 billion compared to $10.2 billion in the prior-year period, which included net sales for the 53rd week of $678.1 million. Same-store sales rose about 1%.

“When the additional sales from last year are removed, total sales grew by 6.9%,” Neil Saunders, managing director of GlobalData, said in a note to clients Thursday. “This is a robust pace of growth that reverses the slowdown of the last two quarters. However, most of the uplift is still being driven by the opening of new stores, with underlying comparable sales coming in at a much weaker 0.7%.”

New stores are helping Dollar General gain market share overall, according to Saunders, but the performance from existing shops suggests that they are losing share.

“Fortunately, comparable sales have improved dramatically compared to last quarter’s 1.3% decline, and most of the attrition in share continues to come from the nonconsumables categories, which are suffering as hard-pressed core consumers cut back to save money,” he said. “This is an understandable dynamic and one that should correct itself as and when the economy picks back up.

Dollar General declined to comment on Saunders’ remarks.

Dollar General Says It’s on Track To Open Roughly 800 Stores This Year
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