Store closures can often be the sign of a retailer in a period of struggle. Take Kohl’s, for example, which closed about two dozen stores earlier this year and posted a disappointing earnings report this week.
Dollar General is bucking that trend. The Coins2Day 500 discount retailer said Thursday during its earnings report it closed 96 locations in the fourth quarter that ended in late January, but its net sales actually increased 4.5% to $10.3 billion. For the entire fiscal 2024 year, net sales jumped 5.0% to $40.6 billion. Shares were up more than 3.5% as of mid-day Thursday.
Dollar General saw stronger traffic growth during the second half of the fourth quarter in fiscal 2024, according to data from Placer.ai provided to Coins2Day. Consumers may have been more cost-conscious after the holidays and seeking out discount retailers, Elizabeth Lafontaine, director of research at location intelligence and foot-traffic software company Placer.ai, told Coins2Day.
“There’s been a consumer appetite for lower-priced and value-focused offerings over the past year, which could only grow against the backdrop of waning consumer sentiment and potential changes to shopper behavior,” Lafontaine said.
Placer.ai’s data also shows Dollar General outperformed other discount and dollar retailers in terms of foot traffic, although many companies in this category are faring well in light of customers searching for deals amid inflation and economic uncertainty.
Nicole DeHoratius, a professional practice professor at Columbia Business School, said in this era of inflationary prices, families are looking for ways to make the most of their budget, and shopping at stores like Dollar General allows them to do that.
“The pressure on family budgets—given the current economic uncertainty—is likely to continue and as such retailers that are able to offer value to their consumers should come out ahead,” DeHoratius told Coins2Day.
In late February, the University of Michigan’s Index of Consumer Sentiment came in with its weakest reading since November 2023. Concerns about inflation and President Donald Trump’s imposed tariffs have taken a toll on consumer confidence, and also sent stocks tanking the past couple of weeks.
Dollar General CEO Todd Vasos, however, appeared confident the discount retailer can weather any impact tariffs may bring.
“We believe we are well-positioned to mitigate the impact [of tariffs] in 2025,” Vasos said during the Thursday earnings call. “We were able to successfully mitigate the tariff impact in 2018 and 2019.”
However, Vasos conceded the company “did take retail price increases in some instances, along with others across the industry” in 2018 and 2019.
“Given the already stressed financial condition of our core customer, we are closely monitoring these and any other potential economic headwinds, including any changes to government entitlement programs,” Vasos said.
Meanwhile, other discount retailers, including Walmart, are showing signs of struggle. Although Walmart posted another quarter of growth in late February, its forecast for 2025 was lackluster, which sent stocks tumbling at the time. Walmart shares are down 18% from their Feb. 19 peak at $104 per share.
“Our outlook assumes a relatively stable macroeconomic environment, but acknowledges that there are still uncertainties related to consumer behavior and global economic and geopolitical conditions,” Walmart chief financial officer John David Rainey said during the company’s earnings call in late February.
Shares for Dollar Tree, another Coins2Day 500 discount-retail chain, are also down about 15% since the beginning of the year.
Dollar General also plans to expand in 2025. Part of the company’s plan in closing nearly 100 underperforming stores—which accounted for less than 1% of the company’s total store footprint—was to allocate resources to new stores. The company plans to open 575 stores and remodel about 4,250 in 2025.
