An indication at a Dollar General store in Chicago.
Jim Young | Reuters
Dollar General The company on Thursday forecast annual sales above Wall Street estimates, anticipating higher demand from customers hit by inflation who shop for groceries and essentials on the discounter’s stores.
The company’s shares rose about 6% in early trading after falling nearly 45% in 2023 on account of rising costs and powerful competition from larger retailers.
But higher prices and credit costs have pushed price-conscious consumers to cook more meals at home, helping Dollar General see increased foot traffic at its stores as shoppers seek lower-margin and on-demand merchandise relatively than pricier general merchandise .
“With customer traffic growing and market share gains during the quarter, we believe our actions are resonating with customers,” CEO Todd Vasos said in a press release.
Vasos’ strategy – specializing in what matters, resembling increasing worker presence in stores, increasing customer loyalty and expanding private label brands – has helped stabilize Dollar General’s business.
In recent quarters, Dollar General and Rival Money tree are grappling with rising costs related to their supply chains, labor and raw materials, while facing stiff competition from retailers resembling Walmart and Chinese e-commerce platform Temu.
Dollar Tree shares fell greater than 15% on Wednesday after the corporate forecast weak sales and profits for 2024 and laid out plans to shut 970 of its Family Dollar stores.
“Dollar General has a much brighter future outlook than Dollar Tree… Dollar Tree’s challenges with Family Dollar have lasted years while Dollar General has made aggressive efforts to offer more frozen, refrigerated and fresh products,” said Zak, senior analyst at eMarketer Stambor said.
Dollar General forecasts 2024 revenue growth of between 6.0% and 6.7%, above analyst estimates of 4.4% growth to $40.33 billion, in line with LSEG data. Annual earnings per share are still between $6.80 and $7.55, in comparison with estimates of $7.55.
Fourth-quarter net sales of $9.86 billion beat estimates of $9.78 billion. The company also reported higher-than-estimated earnings of $1.83 per share.
