The exterior of a Dollar General convenience store on August 30, 2024 in Austin, Texas.
Brandon Bell | Getty Images
Dollar General CEO Todd Vasos said on Thursday that inflation continues to hurt the discounter’s customers and that the macroeconomic environment won’t improve this year.
On the company’s fourth-quarter earnings call, Vasos said customers are expecting value and convenience “more than ever” from the dollar-store chain.
“Our customers continue to report that their financial situation has worsened over the last year, as they have been negatively impacted by ongoing inflation. Many of our customers report they only have enough money for basic essentials, with some noting that they have had to sacrifice even on the necessities,” Vasos said. “As we enter 2025, we are not anticipating improvement in the macro environment, particularly for our core customer.”
Dollar General’s core consumer is “always strained” due to their economic status, but also resourceful, Vasos said.
“We’ve started to see where [our customer is] getting her sea legs, if you will, on the additional inflation that’s been very sticky out there, and she’s starting to understand her budgets even more,” Vasos said.
Part of the uncertainty, Vasos said, stems from the potential impact of President Donald Trump’s tariffs on the consumer.
When Trump imposed tariffs during his first term in office in 2018 and 2019, Dollar General had to raise some prices in line with others in the industry, Vasos said. But the general store was able to mitigate the impact back then and is “well positioned” to do so again this year, he said.
“Given the already stressed financial condition of our core customer, we are closely monitoring these and any other potential economic headwinds, including any changes to government entitlement programs,” Vasos said.
CFO Kelly Dilts said the company’s 2025 guidance factors in continued economic pressure on the consumer, but does not account for further changes to tariff policy or government initiatives like the Supplemental Nutrition Assistance Program, which subsidizes food for low-income Americans.
For the fourth-quarter, Dollar General said same-store sales growth of 1.2% was driven entirely by 2.3% growth in average transaction. Customer traffic fell 1.1% during the period, “impacted by ongoing financial pressures of our core consumer,” Vasos said.
Alongside its fourth-quarter earnings, Dollar General said Thursday it would close 96 Dollar General stores and 45 Popshelf stores and will convert six other Popshelf stores into flagship banner locations this year. Popshelf primarily serves higher-income shoppers with lower-priced products.
Shares of Dollar General closed up nearly 7% on Thursday.
Read the original article here