Dollar Tree and Dollar General sales soar despite pandemic fears forcing customers to limit shopping trips
Consumers are continuing to shop at dollar stores as the coronavirus pandemic rages on. Both Dollar Tree and Dollar General reported strong earnings on Thursday, as a result. Dollar Tree — which also owns Family Dollar — saw a surge in discretionary spending in its latest quarter. Meanwhile, Dollar General continues to boost its fresh grocery capabilities as it focuses on expansion. Visit Business Insider's homepage for more stories.
Even as coronavirus fears prompt consumers to rethink their shopping strategies, dollar-store giants Dollar Tree and Dollar General continue to win over deal seekers. Both chains posted second-quarter earnings results on Thursday. Dollar Tree reported a 3.1% increase in year-over-year same-store sales, while subsidiary Family Dollar saw comparable sales climb 11.6%. Combined, the Virginia-based retailer's net sales increased 9.4% to $6.28 billion. Tennessee-based Dollar General's same-store sales also grew by 18.8%, with net sales jumping 24.4% to $8.7 billion. The dollar-store segment of the retail market has long been known to thrive during tough economic times. Dollar stores have been soaring during the pandemic to date, even eclipsing rivals in the adjacent grocery market. Dollar stores like Dollar Tree and Dollar General additionally represent "one of the few bright spots in the retail sector" in terms of customer store visits during the coronavirus, according to foot-traffic tracker Placer.ai. 'Shopping with a purpose' Dollar Tree saw a big rebound in discretionary spending, which had been down at the company since Easter. Dollar Tree president and CEO Mike Witynski also said that shopping trends have shifted since the start of the pandemic. "Consumer shopping patterns are evolving," Witynski said in a statement. "Customers are shopping with a purpose, while looking to minimize risk and exposure. As a result, we are seeing material increases in average ticket, while seeing a decline in average visits." Dollar General CEO Todd Vasos highlighted the same trend, telling analysts that while spending was up, "customers consolidated trips in order to limit social contact." In its earnings statement, Dollar General credited the COVID-19 pandemic for driving "consumer behavior" that has "had a significant positive effect on net sales and same-store sales." The company has seen a boost in consumables, seasonal, and apparel in recent months – with the largest sales increase in home products. Despite the positive earnings results, the dollar stores did face a number of challenges during the last quarter. As an example, Dollar Tree said that pandemic and civil unrest-related spending — in the form of employee bonuses and repairs of stores damaged in riots — cost the company more than $150 million in the period. Witynski also said that both Dollar tree and Family Dollar saw inventory levels decline in certain categories, partly due to "high customer demand for paper towels and cleaning supplies." What's next for the dollar store giants Built up momentum during the pandemic has allowed both Dollar Tree and Dollar General to continue expanding. Dollar Tree opened up 131 new stores — while shuttering around 26 — during the quarter. Meanwhile, Dollar General has launched 500 new stores so far this year, and remodeled or relocated an additional 1,016. Executives from both companies expressed optimism about the coming months. Witynski said that, while back-to-school spending underwent "volatility" due to uncertainty about school openings, the company hasn't seen overall sales in the category decline. He also expects similar results for Halloween, saying that consumers would likely shift spending from candies for trick-or-treaters to decorations. "Since they're spending more time at home, they want to decorate their homes more and invest in their homes more," Witynski said on the earnings call. Beyond seasonal items, Witynski said "anything related to stay at home, such as lawn and garden and outdoor grilling, has continued to perform very well" as consumers continue to congregate inside during the pandemic. In-demand products at Dollar Tree and Family Dollar also include apparel like loungewear, sleepwear, slippers, and athleisure garments.
Meanwhile, Dollar General is forging its path into e-commerce and grocery with its DG Fresh initiative, order pickup, and cooler expansion program. COO Jeff Owen told analysts that the company has already installed 60,000 cooler doors in its fleet of stores, up from its target of 55,000. First introduced in January 2019, the DG Fresh initiative is the dollar-store giant's push to establish fresh and frozen-food options in its stores, which have traditionally lacked a grocery element. Currently, Dollar General delivers grocery products to more than 9,000 of its total 16,500 locations. Owen added that Dollar General has added 55 new products to DG Fresh. The company has also doubled down on its push for new and improved private brands, as they represent "opportunities to further enhance our value proposition." Are you a dollar store employee? Email confidential tips to email@example.com.SEE ALSO: Shoppers flooded dollar stores to stockpile cheap goods during the pandemic — here's why that's been a major boon to Dollar General Join the conversation about this story » NOW WATCH: Dollar stores are a billion-dollar industry. Here's how they get customers to spend more money.
More like this (3)
UK retail spending returns to pre-pandemic levels — but a 15.9% drop in clothes sales show the recovery is 'deceptive,' one expert says
Summary List Placement British shoppers have drastically cut back on clothes purchases since February, making clothing...Summary List Placement British shoppers have drastically cut back on clothes purchases since February, making clothing the worst-hit retail sector during the pandemic, according to figures released on Friday by the Office for National Statistics (ONS). Clothes sales in August were 15.9% below their levels in February, before the UK went into lockdown. Overall retail sales have returned to pre-pandemic levels — in total, British shoppers spent 0.7% more in August than in July, and 2.5% more than February, the ONS data showed. This was fueled by a home-improvement boom: Sales-by-volume in household goods stores were 9.9% higher than in February, the ONS reported. Marc Ostwald, chief economist at ADM Investor Services, said that this suggests a "robust recovery in consumer spending" on the surface — but the figures are "deceptive," he said. Sales in bricks-and-mortar stores have plummeted, and "considerable further job losses" will follow, he added. Separate data from the Retail Sales Inquiry and the Business Impact of Coronavirus Survey showed that fewer customers were shopping for clothes in person in August compared to February, and 85.7% of clothing stores said they had fewer customers in mid-August compared to the weeks before COVID-19 hit the UK. Online sales and footfall are both falling Online sales are dropping across most sectors, though they still remain much higher than before the pandemic. For every £100 shoppers spent in August, £28 of this was spent online, ONS data shows. This is 2.5% less than in July, but still more than 50% higher than this time last year. After "other stores," the sector that saw the highest drop in online sales other than clothing was food, the ONS reported. Online food sales were nearly 5% down in August compared to July as customers returned to supermarkets — but British shoppers are still spending nearly twice as much on grocery deliveries than last year. Total food sales across both online and physical stores fell by around 2% from July to August. Britain's "Eat Out to Help Out" scheme – which saw diners eat more than 100 million meals out in August as part of a government-subsidized scheme to boost the hospitality industry – caused supermarket sales to plummet by £155 million ($201 million) in August, research by data company Kantar shows. Footfall data from Springboard suggests that the number of shoppers visiting physical stores also fell. In the week starting 7 September, around 28% fewer shoppers visited bricks and mortar stores than the same time a year ago, compared to just a 25% decrease during the two weeks before that. Ostwald, from ADM Investor Services, said that the migration from bricks and mortar retail to online, and reduced spending on non-retail recreation and leisure activities, "will likely result in considerable further job losses, especially with escalating reintroduction of lockdown measures." UK retail jobs have nearly halved over the past year, and job cuts have reached their fastest rate since 2009, the Confederation of British Industry (CBI) said in August. British retailer Marks & Spencer is among those that have laid off staff during the pandemic. Over the past three months, it has announced 7,000 job cuts — 10% of its total workforce.SEE ALSO: UK retail jobs have nearly halved over the past year, as job cuts reach their fastest rate since 2009 Join the conversation about this story » NOW WATCH: Why thoroughbred horse semen is the world's most expensive liquid
Summary List Placement Target will be building on its wide range of food and beverage...Summary List Placement Target will be building on its wide range of food and beverage options this month. The grocery giant is adding hundreds of new items to its Good & Gather line that's exclusive to the company, Target announced today. Additionally, Target is starting a new premium line called Good & Gather Signature, which will feature nearly 60 Italian sauces, specialty coffees ranging between $2.99 to $9.99 as well as gourmet pizzas and pastas. This comes as the coronavirus pandemic has caused grocery chains, including Target, to shift their focus to online shopping as more Americans are now purchasing their food from behind their computer screens. Good and Gather is a private label, or what Target calls an "owned brand." The brand has generated over $1 billion in sales since it was created one year ago. Overall, Target's food and beverage private brands have grown more than 30% this year, according to Target CEO Brian Cornell who spoke during the company's earnings call on August 19. "Good and Gather brand is clearly resonating with our guests and delivering on our food and beverage vision to enhance the Target experience by making it easy for families to discover the joy of food," Cornell said. Markets Insider previously reported that Target's same-store sales increased by over 24% in the last quarter that ended August 1. Online consumption has also been working in Target's favor lately, as digital same-store sales climbed 195% in the quarter. However, the company might be looking for ways to build off its second-quarter earnings success as uncertainty lingers around the US economy and the national response to the COVID-19 outbreak. "There's just so much uncertainty today," Cornell said while appearing on CNBC's Squawk Box on August 19. "What's going to happen with the pandemic, what's happening with flu season — as we go into the fall, questions about the economy and the new stimulus, do we go back to school and back to college."Join the conversation about this story » NOW WATCH: Why thoroughbred horse semen is the world's most expensive liquid
Target, Kohl's, and Nordstrom are rolling out holiday deals before Thanksgiving, killing the shopping season as we know it
For many retailers, the holiday shopping season will begin well before Thanksgiving this year. Retailers want...For many retailers, the holiday shopping season will begin well before Thanksgiving this year. Retailers want to avoid crowds and large order volumes that could lead to delays. Complicating matters, UPS, FedEx, and the US Postal Service have all announced surcharges on holiday shipping that will go into effect later this year. Visit Business Insider's homepage for more stories. This year, shoppers might start to see holiday deals roll out alongside leftover Halloween candy. A growing number of retailers have said that due to the coronavirus pandemic, they will shift the timing of their holiday promotions to avoid the usual rush in November and December. Target recently said that it would close its stores on Thanksgiving and start rolling out its holiday deals in October. During the company's earnings call on August 19, CEO Brian Cornell said Target would have to "stay nimble" to adjust to a "very different holiday season." "We're going to put a big premium on ease and convenience, delivering great value, but will emphasize safety. And we'll also make sure that our guests knows that those top items and that great value is going to be available throughout the season," Cornell said, emphasizing that the store's same-day fulfillment options would give shoppers flexibility on the timing of their shopping. Black Friday as a shopping holiday has been declining in importance over the last several years as spending continues to move online and discounts become more prevalent year-round. Still, beginning holiday deals in October represents a big shift to a seasonal schedule that usually sees retailers double down on the period between Thanksgiving and Christmas. A number of retailers, including Walmart and Best Buy, have joined Target in saying they would keep stores closed on Thanksgiving. Nordstrom said in its own earnings call on Tuesday that while it would likely stop short of decorating stores for Christmas before Thanksgiving, it would make gifts available earlier in the fall than usual. "I think it's pretty clear that there's an opportunity for us to sell gifts prior to Thanksgiving," Pete Nordstrom, president and chief brand officer at Nordstrom, said during the call. The changes aren't just about physical stores, though. Shipping volumes have been unusually high as consumers opt to shop online and largely stay home amid the ongoing pandemic. Victoria's Secret and Bath & Body Works parent L Brands similarly said in earnings that it would spread its holiday promotions over a longer period of time rather than concentrate them in the fourth quarter, when it typically sees the "majority" of its annual sales and profits due to gift-buying. The company said it would do so because of "traffic constraints imposed by social distancing protocols in stores and capacity restraints in our direct channel distribution centers," adding that it had a "very cautious outlook about our ability to manage our typical holiday volumes." Complicating matters, UPS, FedEx, and the US Postal Service have all announced surcharges on holiday shipping that will go into effect later this year. Spreading deals out over a larger period of time could help retailers better manage the impact of those surcharges. In Kohl's earnings call, CFO Jill Timm referred to the surcharges as a "headwind" and said the company is working through alternatives to avoid them. Kohl's is also looking to get holiday shopping going in October. The pandemic has disrupted the usual retail calendar in more ways than one. The back-to-school shopping season, for example, doesn't seem to have provided the sales surge that certain retailers usually see, as distance learning has continued for many students across the country. Abercrombie & Fitch CEO Fran Horowitz told CNBC that she expects both back-to-school and holiday shopping to stretch on for longer than usual. She called the trend a "flattening of the curve." "Maybe the peak [around] Black Friday isn't as big, but there is still a lot of opportunity in December to do a lot of business," Horowitz told CNBC. SEE ALSO: Victoria's Secret parent L Brands warns it might not be able to handle the holiday rush, as retailers plan for a shopping season unlike any other Join the conversation about this story » NOW WATCH: Why thoroughbred horse semen is the world's most expensive liquid