Subscribe Login
DE4CC0DE-5FC3-4494-BCBF-4D50B00366B5
Retail

Dollar Chains See Surge In Sales, Profit As Households Cut Costs

America's biggest dollar store chains reported better-than-expected quarterly profit on Thursday, as cash-strapped consumers sought lower priced groceries and household items in a coronavirus-induced economic downturn.

Sales at Dollar General Corp and Dollar Tree Inc remained robust even after the panic-buying surge at the start of lockdowns, with high US unemployment pushing demand for cheaper cereals, vegetables and daily essentials.

The dollar stores said sales of more discretionary items including clothing were also up, as households spent government stimulus checks carefully.

'A Good Position'

"We're going to be in a good position in the back half of the year and going into next year - when customers are going to need us most as the extra benefits go away and with the unemployment rate where it is," Dollar Tree's new chief executive officer Mike Witynski said.

"We believe we're in a great position as we were in '08 and '09," Witynski said, referring to the last financial crisis.

Dollar General's second-quarter same-store sales rose 18.8% and beat estimates of a 15.1% increase.

Overall same-store sales at smaller rival Dollar Tree were not as strong, rising 7.2%, sending its shares down 3%.

Shopping Trends

While shoppers are spending more when they visit dollar stores, they are making fewer trips, which Evercore ISI analysts say is an opportunity for Walmart Inc and Amazon.com Inc to pull away customers with their significantly better developed e-commerce operations.

Net income at Dollar General rose 84.6% to $787.6 million, or $3.12 per share, beating market expectations of $2.44. It also said it had restarted share buy backs and would repurchase an additional $2 billion worth of stock.

Dollar Tree, which also owns the Family Dollar chain, said net income rose 45% to $261.5 million, or $1.10 per share, beating analysts' estimate of 92 cents.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

Stay Connected With Our Weekly Newsletter

Processing your request...

Thanks! please check your email to confirm your subscription.

By signing up you are agreeing to our Terms & Conditions and Privacy Policy
Enjoy unlimited digital access for 30 days
Get exclusive access to the latest grocery retail & FMCG news, interviews with industry leading executives, and expert analysis on the trends shaping the sector today
Enjoy unlimited digital access for 30 days
Enjoy unlimited digital access for 30 days
Get exclusive access to the latest grocery retail & FMCG news, interviews with industry leading executives, and expert analysis on the trends shaping the sector today
Enjoy unlimited digital access for 30 days