Dollar General Says Value and Convenience Bring Customers to Stores

Value and convenience are continuing to draw consumers to dollar stores.

Dollar General said in a Thursday (Dec. 1) press release that during the quarter ended Oct. 28, its same-store sales increased 6.8% year over year, driven by a higher average transaction amount and a modest increase in customer traffic.

“We are pleased with our strong sales growth in the quarter, as well as a modest increase in customer traffic and continued share gains in both consumable and non-consumable product sales, all of which we believe are a testament to the strength of the value and convenience proposition we offer our customers,” Dollar General CEO Jeff Owen said in the release.

These comments came about two weeks after Dollar Tree, similarly, credited its value spread against grocery and drugstores for its first traffic increase in three years.

While Dollar General’s share of non-consumable product sales grew, its sales in this category slipped. The apparel, seasonal and home products categories declined during the quarter, while the consumables category grew enough to deliver an overall gain.

Thursday morning, Dollar General shares were down about 9% in early trading, as investors were disappointed in the company’s cautious Q4 earnings guidance in the face of a challenging macroeconomic environment, cost pressures and supply chain difficulties.

“We believe the majority of these and other gross margin pressures are largely temporary, and we are confident in our plans to drive greater supply chain efficiencies moving forward,” Owen said in the release.

Despite the challenges, Dollar General is making progress on its real estate projects. It executed nearly 800 real estate projects during the quarter, opening 268 new stores, remodeling 485 and relocating 45.

The company also announced Thursday that it plans to execute another 3,170 in the United States in fiscal year 2023, including 1,050 new store openings, 2,000 remodels and 120 relocations. It also plans to open new stores in Mexico.

“We are excited about our plans to extend our ability to serve more customers and believe we are well-positioned to continue delivering long-term sustainable growth and value for our shareholders,” Owen said in the release.

Looking ahead, Dollar General said it expects same-store sales growth of 6% to 7% during the fourth quarter.

For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.