Business

3 things to learn from Dollar General, Dollar Tree earnings that sent stocks soaring

Dollar General and Dollar Tree Stores

beautiful pictures

Shares of Common Dollar and Dollar tree appeared on Thursday, as discounters beat Wall Street’s quarterly earnings expectations, upending their outlook for next year and talking about consumers rushing to cut prices during times of inflation.

As of midday Thursday, shares of Dollar General are up about 14% and Dollar Tree is up about 20%.

Two retailers say they see an opportunity to grow as Americans consider more value in their purchasing decisions, whether buying groceries or seasonal decorations.

“We’ve started to see our core customers start shopping more purposefully,” Dollar General CEO Todd Vasos said on a call with analysts. And we’re starting to see that the next layer of customers start shopping with us a little more, too. ”

Dollar Tree Executive Chairman Rick Dreiling listed the many challenges facing consumers, from the highest inflation since the early 1980s to record-high gas prices and uncertainty from major events. current events such as the Ukraine war and the pandemic. He added that many consumers “are living paycheck to paycheck.”

“In difficult times, value retail can be part of the solution to help families attract money to meet their growing needs,” he said.

Dollar General and Dollar Tree beat expectations for fiscal first-quarter earnings, revenue, and in-store sales.

Dollar Tree, which includes the Family Dollar banner, said it now expects net sales for the year to range from $27.76 billion to $28.14 billion, compared with previous expectations of between $27.22 billion. USD to 27.85 billion USD.

Dollar General said it expects net revenue growth of about 10% to 10.5% versus a previous expectation of about 10%. It raised its same-store sales forecast to around 3% to 3.5% growth from its previous expectation of 2.5%.

Here are three key takeaways from the two discount companies’ first-quarter financial earnings reports:

A mixture of different goods

Capture the moment

Even before inflation spiked to a 4-decade high, Dollar Tree and Dollar General had plans for larger stores, expansion into new categories and strategies to attract more customers. Retailers doubled on Thursday – saying the challenging economic backdrop makes the timing and offerings more appealing.

Dollar General, which has more than 18,000 stores, will open 1,100 new locations this year. It will expand Its new store concept, PopShelfand continue with the addition of more health-related goods. And it will expand globally by opening up to 10 stores in Mexico by the end of the year.

The company is also getting bigger with its stores. About 800 of the new locations will be more than 8,500 square feet, with side aisles for health and beauty items and coolers for products or other groceries. Chief Financial Officer John Garratt told analysts on the call.

Dollar General is adding more limits and the end screen emphasizes its cheaper private label and $1 items, Vasos said. He said the company has “seen an acceleration in our private branding business” in recent weeks.

Dollar Tree, which includes more than 15,500 stores, is opening 590 stores this year. It is adding more merchandise by increasing the price of $1 items to $1.25 and adding merchandise with $3 and $5 price tags. And it attracted new executives to revolve around its Family Dollar banner.

Higher cost management

Dollar Tree and Dollar General were not immune to higher costs in the first quarter, and some investors have raised concerns about whether they can keep prices low without hurting profits.

So far, retailers have managed to beat Wall Street’s earnings expectations despite higher prices for fuel, freight and more. That’s what Walmart and Target didn’t do.

Vasos said Dollar General can swap to other commodities or downsize if a particular commodity increases in price. He said the company is strictly managing inventory to avoid excessive price drops and unsold surplus items.

Dollar General is also taking some cost-saving and profit-boosting measures. It added self-checkout to more than 8,000 stores by the end of the first quarter. It plans to turn around 200 stores into self-pay this year alone. It has more than doubled its fleet of private trucks from 2021, so they account for about 40% of its fleet of trucks going abroad by the end of the year. And it is carry more health care products, such as cough and cold medicine, has better profit than food.

At Dollar Tree, rising prices have been a big driver of profits. Last year, the retailer announced that it would raise the price of dollar items by a quarter. It is also rolling out $3 and $5 items to more stores.

Witynski says that a wider price range means new sales opportunities during key seasons, such as the holiday season. He said Dollar General had strong sales around Easter and Valentine’s Day and predicted a similar move in the second half of the year with back to school, Halloween and the holiday season.

Source link

news7h

News7h: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, Sports...at the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button