USA: dollar store chains positive on outlook for 2020

Date : 13 March 2020

Keshia Beadle

Senior Retail Analyst

With Dollar General and Dollar Tree both reporting their Q4 and full year results, we take a look at performance and explore what is driving this growth.

Dollar General highlights

With Q4 sales up 7.6% and same store sales up 3.2%, Dollar General finished the year positively. This ends a strong year for the retailer, with full year sales up 8.3%, to $27.8bn and same store sales up 3.9%. This is also the 30th consecutive year of same store sales growth. Sales growth was seen across food, seasonal, home and clothing. Food increased the most, growing by 8.4% to $5.5bn. Clothing also performed well, growing by 6.3% to $309m. 975 new stores were opened throughout the year, with a further 1,024 remodeled and 100 relocated.

Dollar Tree steadily implementing improvements

Dollar Tree saw Q4 sales increase by 1.8% to $6.3bn, with same store sales up 0.4%. Broken down by banner, the increase was 1.4% in same store sales for Dollar Tree and a decline of 0.8% for Family Dollar. For the full year, sales increased by 3.5% to $23.6bn, with same store sales up 1.8%. By banner, this was an increase of 2.3% in same store sales for Dollar Tree and a 1.4% increase for Family Dollar. During 2019, support functions were merged together in one location, which is expected to help with collaboration, teamwork and efficiencies. The retailer also launched its Dollar Tree Plus! initiative, with a 2.0 version already planned for 2020.

Outlook for 2020

Both retailers are forecasting positive growth for 2020. Dollar General plans to open around 1,000 new stores, remodel 1,500 and relocate 80 stores. It forecasts total sales growth of 7.5-8% and same store sales growth of 2.5-3%. Dollar Tree forecasts a low single digit increase in same store sales. It plans to renovate around 1,250 Family Dollar stores. The dollar store segment continues to be an area of strong growth in the US market and both retailers are continually developing new initiatives and strategies to win.

 

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