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Dollar General shares sank Thursday to become the biggest exporter of S & P after posting disappointing earnings prospects for the year. Photographer: Christopher Dilts / Bloomberg© 2017 Bloomberg Finance LP
Shares of Dollar General Corp., after reaching an all-time high on Wednesday, plunged 7.5% Thursday after the largest US dollar chain saw disappointing earnings prospects, thanks in part to its aimed at increasing spending in the areas of self-payment take the distribution of fresh groceries in the house. The company's earnings for the fourth quarter of the year ended February 1 were also disappointing after increasing rebates eroding profit to attract buyers.
Nevertheless, beyond short-term stock market fluctuations, the company's results and initiatives speak volumes about the situation of low-income buyers and the retail retail market.
Here are some takeaways:
Price remains the main differentiator for low-income buyers: Dollar General's same-store sales in the fourth quarter increased 4%, in part due to the anticipated release of SNAP coupon benefits following the government shutdown. For the year, like-for-like sales increased 3.2%, a 29th consecutive year of growth.
Dollar General stated that it continues to gain market share in the consumables category as customer visits and their average expenses increase.
However, the demand did not cost anything: the retailer's gross margin decreased from 32.1% to 31.1% due to the increase in rebates.
In fact, a Gordon Haskett price study released this week showed that dollar stores have narrowed their price gap relative to Walmart, especially in the major food and beverage categories. For example, the report showed that "Walmart's price advantage" over Dollar General decreased to 0.3 points in February from 1.7 points in December.
The fourth holiday quarter "has the largest traffic in the retail business," said Todd Vasos, CEO of Dollar General, during a conference call. "In the fourth quarter, we pulled promotional levers that, in our opinion, will support the growth of traffic … We saw a real opportunity to take shares."
And keeping prices low to attract buyers will remain the key for discounters. Vasos said that if Dollar Generals' main customer "felt better about having a little more money in his pocket", it was "working more hours, and in some cases, multiple jobs ". "We are positioning ourselves for half of the year for a slightly weaker consumer," he said.
What store closures? While fashion and other retailers, including Victoria's Secret and the Gap brand, are reducing their physical footprint, Dollar General, which already had 15,370 stores in the US on Feb. 1, has more than tripled the number of stores in the US. rival Walmart, USA.& nbsp; sees a lot of room to grow in the country. She announced plans to open 975 stores this year and renovate or relocate 1,100 stores. In comparison, its main rival, Dollar Tree, who also owns Family Dollar, totaled 15,237 stores on February 2.
Nevertheless, Dollar General continues to grow at a time when Dollar Tree is still striving to recover its acquired Family Dollar business. Dollar Tree recently announced a $ 2.7 billion dollar family cut & nbsp;and will close up to 390 stores under this name, which sell items at different prices, such as Dollar General, and will rename some of the Family Dollar stores under its eponymous label, which sells everything for $ 1.
"Our proven model of high returns and low risk for real estate growth is one of the main strengths of our business," Vasos said on the phone Thursday. "We have long since successfully opened hundreds of stores each year that meet our strict return thresholds."
Yes, the fresh aisle is a key battleground for retail. Discount retailers run by Walmart are not the only ones to rely on fresh groceries and other consumer items to attract buyers. The increase in Dollar General's expenses this year will require a larger share of the internal distribution of perishable items, mainly fresh produce and frozen products. The company announced that this decision, dubbed DG Fresh, would enable it to reduce product costs, better store inventory and move more fresh items under national brands and a wider badortment of private labels.
"We hope that DG Fresh will enable us to better tailor our product selection to the needs of our customers, especially in rural areas," said Vasos.
Think of the potential opportunity, especially when many rural markets are called "food desert". Last year, Dollar General also unveiled a line of what it has described as healthier food options to meet the growing consumer demand.
Low-income customers also want the convenience and choice to shop online and at checkout. Although late in the game, Dollar General said it will test an initiative this year to allow buyers to buy online and pick up in stores. This could help it drive more traffic to the stores and increase online sales, an area in which retailers, both Walmart and Target have doubled to use their fleet of stores as an advantage to compete with Amazon.
Dollar General has also announced the expansion of its online coupon subscriber accounts beyond the current 15 million. Dollar General has introduced a DG GO! last year, to allow customers to scan items on their phone during their purchase and skip the payline through a kiosk for the app. Dollar General reported seeing more than 140,000 downloads and about 25,000 active users per month, although the feature is only available in approximately 250 stores.
"It is increasingly important for our customers to have a suite of user-friendly and useful digital tools," said Vasos, adding that customers who use his "digital tools" spend on average more than double of these tools. & nbsp;"Buyers not engaged digitally."
High end or low income, more and more consumers want to make purchases, and retailers are in the race to meet this need.
Lily: Neiman Marcus plays the retail theater in New York's premier store & nbsp;
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Dollar General shares fell on Thursday to become S & P's biggest downtrend after posting disappointing earnings prospects for the year. Photographer: Christopher Dilts / Bloomberg© 2017 Bloomberg Finance LP
Shares of Dollar General Corp., after reaching an all-time high on Wednesday, plunged 7.5% Thursday after the largest US dollar chain saw disappointing earnings prospects, thanks in part to its aimed at increasing spending in the areas of self-payment take the distribution of fresh groceries in the house. The company's earnings for the fourth quarter of the year ended February 1 were also disappointing after increasing rebates eroding profit to attract buyers.
Nevertheless, beyond short-term stock market fluctuations, the company's results and initiatives speak volumes about the situation of low-income buyers and the retail retail market.
Here are some takeaways:
Price remains the main differentiator for low-income buyers: Dollar General's same-store sales in the fourth quarter increased 4%, in part due to the anticipated release of SNAP coupon benefits following the government shutdown. For the year, like-for-like sales increased 3.2%, a 29th consecutive year of growth.
Dollar General stated that it continues to gain market share in the consumables category as customer visits and their average expenses increase.
However, the demand did not cost anything: the retailer's gross margin decreased from 32.1% to 31.1% due to the increase in rebates.
In fact, a Gordon Haskett price study released this week showed that dollar stores have narrowed their price gap relative to Walmart, especially in the major food and beverage categories. For example, the report showed that "Walmart's price advantage" over Dollar General decreased to 0.3 points in February from 1.7 points in December.
The fourth holiday quarter "has the largest traffic in the retail business," said Todd Vasos, CEO of Dollar General, during a conference call. "In the fourth quarter, we pulled promotional levers that, in our opinion, will support the growth of traffic … We saw a real opportunity to take shares."
And keeping prices low to attract buyers will remain the key for discounters. Vasos said that if Dollar Generals' main customer "felt better about having a little more money in his pocket", it was "working more hours, and in some cases, multiple jobs ". "We are positioning ourselves for half of the year for a slightly weaker consumer," he said.
What store closures? While fashion and other retailers, including Victoria's Secret and the Gap brand, are reducing their physical footprint, Dollar General, which already had 15,370 stores in the US on Feb. 1, has more than tripled the number of stores in the US. rival Walmart, USA. sees a lot of room to grow in the country. She announced plans to open 975 stores this year and renovate or relocate 1,100 stores. In comparison, its main rival, Dollar Tree, who also owns Family Dollar, totaled 15,237 stores on February 2.
Nevertheless, Dollar General continues to grow at a time when Dollar Tree is still striving to recover its acquired Family Dollar business. Dollar Tree recently announced a $ 2.7 billion dollar family cut and will close up to 390 stores under this name, which sell items at different prices, such as Dollar General, and will rename some of the Family Dollar stores under its eponymous label, which sells everything for $ 1.
"Our proven model of high returns and low risk for real estate growth is one of the main strengths of our business," Vasos said on the phone Thursday. "We have long since successfully opened hundreds of stores each year that meet our strict return thresholds."
Yes, the fresh aisle is a key battleground for retail. Discount retailers run by Walmart are not the only ones to rely on fresh groceries and other consumer items to attract buyers. The increase in Dollar General's expenses this year will require a larger share of the internal distribution of perishable items, mainly fresh produce and frozen products. The company announced that this decision, dubbed DG Fresh, would enable it to reduce product costs, better store inventory and move more fresh items under national brands and a wider badortment of private labels.
"We hope that DG Fresh will enable us to better tailor our product selection to the needs of our customers, especially in rural areas," said Vasos.
Think of the potential opportunity, especially when many rural markets are called "food desert". Last year, Dollar General also unveiled a line of what it has described as healthier food options to meet the growing consumer demand.
Low-income customers also want the convenience and choice to shop online and at checkout. Although late in the game, Dollar General said it will test an initiative this year to allow buyers to buy online and pick up in stores. This could help it drive more in-store traffic and increase online sales, an area in which retailers, Walmart and Target, are working to use their store fleet as an advantage to compete with Amazon.
Dollar General has also announced the expansion of its online coupon subscriber accounts beyond the current 15 million. Dollar General has introduced a DG GO! last year, to allow customers to scan items on their phone during their purchase and skip the payline through a kiosk for the app. Dollar General reported seeing more than 140,000 downloads and about 25,000 active users per month, although the feature is only available in approximately 250 stores.
"It is increasingly important for our customers to have a suite of user-friendly and useful digital tools," said Vasos, adding that customers who use his "digital tools" spend on average more than double of these tools. "Buyers not engaged digitally."
High end or low income, more and more consumers want to make purchases, and retailers are in the race to meet this need.
Read: Neiman Marcus plays in the first store in New York
Related: A 7-Eleven where you can work? Why Retailers May Want to Study Taiwan Convenience Stores
Related: Six tech trends in retail to be watched in 2019 that go beyond competition with Amazon
Related: Why Amazon Go could soon change the way we shop
