General Dollar(NYSE:DG) and Dollar Tree(NASDAQ: DLTR)the two largest dollar stores in America survived the retail apocalypse, which wiped out many other retailers in the past decade. They continued to open new stores even when other retailers were pulled back, and they rebutted Amazon and Walmart By selling cheap products.
Its resilience has made them a reliable recession-bearing investment. However, over the past three years, Dollar General shares have plummeted more than 50% as Dollar Tree shares fell more than 30%. Let’s take a look at why these two strains have sunk. And let’s see if any of them are better value plays now.
Image source: Getty Images.
Dollar General will open stores in rural areas that are not saturated primarily by superstores. Although they don’t actually sell everything for $1, they are trying to sell their products at a much lower price than their competitors. It generates a large portion of its revenue in the US, but expanded to Mexico in 2022 with MiSúper Dollar General Stores.
From 2021 and 2024 (ends January 31, 2025), the number of stores at General Dol’s year-end has increased from 18,130 to 20,594. For 2025, we plan to open approximately 575 new stores in the US and up to 15 new stores in Mexico.
Dollar Tree focuses on urban and suburban markets, and seeks to dig into stores between low-income neighborhoods like Walmart and superstores. Originally, they sold all of their products for $1, but over the past four years they have been increasing prices to combat inflation and selling a wider range of products. I acquired the Chief Freival Family Dollar in 2015, but after 10 years of sales this year, I finally sold a struggling banner.
From 2021 to 2024 (ends February 1, 2025), Dollar Tree’s year-end store (including family dollars) increased from 15,115 to 16,774. However, in fiscal year 2025, selling family dollar stores will reduce the number of stores. At the end of the first quarter of 2025, its Dollar Tree segment operated 9,016 stores.
Both the Dollar General and Dollar Trees have grown Same store sales The past three years.
Sales growth for the same store
2022
2023
2024
General Dollar
4.3%
0.2%
1.4%
Dollar Tree*
9%
5.8%
2%
Data Source: Company Revenue Report. *Excluding family dollars.
The same Dollar General store sales slowed in 2023 as they tackled inflation headwinds in consumer spending (particularly among low-income consumers), theft and inventory shrinkage issues, and cost-cutting measures that pose operational challenges.
However, in 2024, as it closed several weak stores and closed operational improvements prioritized over immediate cost-cutting strategies, its growth accelerated again, opening more pop shelf concept stores to sell non-essential products at a wider margin.
For fiscal year 2025, sales of the same store are expected to increase by 1.5% and 2.5% as more pop shelf stores continue to open, more gas stations to more country dollar stores, remodel old locations, and new stores in more promising markets. The diluted EPS, which fell sharply in 32% in 2024, is expected to rise from 2% to 14% in fiscal year 2025. Analysts expect EPS to increase by 12% per year, even as unpredictable tariffs narrow down the margins for almost the period.
Sales growth for the same Dollar Tree store slowed in 2023 and 2024 as it tackled inflation, weak consumer spending, bloated inventory and theft. The decision to expand the price range alienated some of its customers and a “combo strategy” that fused that dollar tree with a family dollar banner did not stop its slowing down.
However, in fiscal year 2025, Dollar Tree believes sales for the same store are up 3% to 5%. It is expected that the continuous conversion of stores to a new multiprice “3.0 format” ($1.25-$7.00 tier) will drive acceleration in order to attract higher-income customers. The sale of family dollars requires the release of more cash to strengthen the main banner.
Dollar Tree expects EPS adjusted from continuing operations that immersed 12% in fiscal year 2024 will rise from 1% to 11% in fiscal year 2025. Analysts expect a 6% increase in adjusted EP.
Common dollar transactions trade with 20x advance revenues and pay a forward dividend yield of 2.2%. Dollar Tree trades with revenues of 21 times earlier, but does not pay dividends.
The dollar general may be a cheaper stock, but Dollar Tree’s family dollar sales, a stronger growth in sales in the same store, and a more compelling investment with a clearer plan to expand the range of high-income consumers. Dollar General’s focus on rural areas limits its ability to attract wealthier customers, but the expansion of pop shelf is The five below.
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