When the stock opened today, it actually decline from the previous close and gave up all pre-market gains.
1 Like
On a local level for me, former 99c Store location is now an operating Dollar Tree location. Within a 2.5-mile radius, I now have access to 4 Dollar Tree locations.
If I had a quarter for every …, I’d have a $1. But, most items at the store are $1.25 
Is tariff impact all priced in? Is 2025 is the year dollar stores find some bottom? Both DG and DLTR are trading at 10 year low’s.
2 Likes
They might be tracking their lows, but I think there is a place for them. On my recent rounds, I noticed my local Big Lots had closed. Further research, indicates many of the stores have closed, and the business was sold Gordon Brothers Retail Partners
Now that I have a DLTR position (slightly in the black), I am holding onto my stake.
I think we recognize that the dollar stores were a good idea but they over built. With many of us having half a dozen stores to choose from. Too much competition.
Plus they serve the low end of the market. The one most sensitive to inflation. And rising costs.
Some stores will close; some will declare bankruptcy. The trick is to identify the survivors and spot the bottom. Yes, many are likely to recover. But seems to take lots of patience. Maybe another year.
1 Like
Both $DG declined 72%, and $DLTR 58%. The stocks are moving sideways since Sep-2024. They need to base, the business is going to make changes, take some write-off’s, investments, etc. And of course we have the tariff uncertainty. 2025 is going to be a wash, meaning mostly moving sideways. The stock has to base, before it moves higher.
The probabilities of this making a V shape recovery is relatively less. We should wait for the rhetoric vs reality on tariffs and see how the business is adjusting and where the margins’ are falling.
Patience grasshopper, patience.
2 Likes
The below chart shows both stocks moving sideways for the last 5 months. Still they need to get to a place where they can consistently do 2%~3% SSS gains. We are still couple of quarters away is my guess.
3 Likes
03/07
Ok, now completely out of DLTR. Tariffs & DOGE activities made me change my mind about this pick. But, will likely keep DLTR on my watchlist.
1 Like
Its interesting that Dollar General appears to have bottomed. Earnings due next week.
The 2025 guidance is uninspiring, SSS growth of 1.2% to 2.2% is not even accounting for inflation. In fact, their inventory is shrinking, may be they are able to turnover much better or … Still planning to open 575 new stores and planning to spend $1.3 ~ $1.4 Billion on capex. Interesting that DG is pivoting into digital delivery. Now, with DoorDash partnership they are going to expand home delivery from 10K of their stores.
The big e-commerce retailers like Amazon, WMT are able to make inroads into convenience store segment. Not clear how tariff on China is going to hurt them. How long they can open new stores to show some sales growth? How many more stores US can support?
To me, it seems like investing in DG is cigar bu$$ investing. Is it even worth spending time on this segment?
Just keep opening new stores to show sales growth is not going to take this company anywhere or the stock price. The dollar stores have lost identity.
CNBC reported price rise was from recommendation by Deutsche Bank. DG has well positioned stores but found it self with wrong product mix when inflation caused customers to reduce higher margin purchases.
You would expect them to clear wrong merchandise and readjust. Might continue for rest of the fiscal year but good position to recover. Stores often have little competition unless you are willing to drive for miles. Recession would mean maybe too soon.
There’s a new CEO (same as the old CEO, he left and came back) and is making changes. Eliminating - or at least lessening the reliance on self-checkout, which they claim was responsible for a lot of shrink. Product mix to be updated.
Meanwhile Dollar Tree is closing 1,000 locations, which should be a benefit to DG, presumably a lot of those closed locations will be where the “Dollar ##” concept was over-saturated.
I bought a small slug of DG two weeks ago, based on a Barron’s story and a few posts on Shrewdm.com noting that it had fallen 70% from its highs. Earnings this week were better than expected, it’s bounced up even as the market has cratered. Wish I’d bought more. I know I said I’d wait until recession, but I’ve had good luck with DG before (thanks mungo) and am back in, at least a little.
The concept is viable, certainly, it’s all about execution, and the CEO who executed well before is back in the operations chair. Reason enough for me.
1 Like
He came back in Oct 2023, that is 6 quarters ago. He was out of CEO job for one year only and in that period 6 months he served as Sr. advisor. Yes, I remember when he returned the stock had initial pop, and rallied from $100 to $150 and here we are.
The jockey left the saddle for a brief 6 months only. Like I said, until they could turn the SSS, this is not going anywhere. And the current SSS growth is below inflation rate, in other words, the stores are actually selling less. That’s why in spite of adding 750 new stores last year, the inventory contracted by $300 M to $6.7 B.
1 Like
I remembered it being 2024. My bad.
Sr Advisor means: do nothing and collect a paycheck. It’s not operational in any way. I’d be surprised if he got two phone calls about the business.
They’re converting some failing stores from a sister chain and pulling back plans for the kind of expansion they’ve done the past few years. Adding in the DTLR closures and oncoming recession (*my speculation) I think they’ll be OK. Not a barn burner, maybe, but adequate to the task.
I don’t want to beat this to death… so I will stop with this. I ran some scenarios’ I don’t see recession is good for DG.
- In a recession lower income folks are going to be more squeezed, thus their $$$ will go to groceries and essentials, which are by definition not high margin products, even for DG.
- In the past, during recession middle income people traded down; I think they will trade down but they will do that within $WMT and $AMZN and not going to dollar stores.
- During COVID inflation, companies, retail passed on the cost to the consumers; Consumers were somewhat shielded by the stimulus; Now we are going to have no stimulus, consumer savings are drained; and companies will have a challenge in passing the cost hike to consumers; This scenario is going to be bad for Dollar stores.
- $DG is a retail company, they are spending $1.3 B on capex but carry only $6.7 B in inventory.
- If you ask the small business which uses Uber Eats or DoorDash for delivery, they will tell you they are squeezed by those delivery companies and their margins are eroded because of the fees they charge; Now DG partnering with DoorDash for digital delivery may help the sales number, not the profit margin.
- Lastly, the turnarounds take more time; I would rather wait for the clear signs that things have turned around; Don’t want to get stuck in a stock going nowhere for few years, of course you are getting 3% dividend; but now a days you are getting that in Money market.
Good luck.
OK, I’ll quit too, except for this:
Google’s AI summarizes:
Historically, dollar stores tend to thrive during recessions as consumers become more price-conscious and "trade down" to seek cheaper goods.Here’s a more detailed explanation:
- Price Sensitivity:
During economic downturns, consumers often prioritize affordability, leading them to seek out cheaper alternatives, which dollar stores offer.
- Dollar Store Performance:
During the 2008 recession, dollar stores like Dollar General and Dollar Tree saw significant sales growth as people sought ways to stretch their budgets.
- Recent Trends:
While dollar stores have historically performed well during recessions, recent economic conditions, including high inflation and a relatively strong job market, have presented some challenges.
- Dollar General’s Perspective:
Dollar General’s CEO has noted that the company is positioned to serve customers during times of economic pressure, especially in smaller communities where they have a strong presence.
- Challenges:
Some analysts suggest that dollar stores may face challenges in the current environment, including competition from online retailers and the fact that middle-class consumers are not necessarily trading down to dollar stores as they have access to other options.