Customers still piling into Dollar Tree and Dollar General stores, research says

By James Rogers

Dollar stores Dollar Tree and Dollar General report fourth-quarter results this week

Dollar stores Dollar Tree Inc. and Dollar General Corp. have been enjoying strong foot traffic in the run-up to the companies' fourth-quarter results this week, according to data from analytics company Placer.ai.

The research found that, during 2023, visits to Dollar Tree-owned Family Dollar were up 2.7% year-over-year, and visits to Dollar Tree (DLTR) were up 15.2%. During January 2024, visits to Dollar Tree were also up 14% compared to January 2020, before the COVID-19 pandemic hit.

Dollar General's (DG) visits were up 6.5% year-over-year in 2023, according to Placer.ai, and in January 2024 visits were up 24.3% compared to January 2020.

Related: Earnings this week will look at the shoppers hit hardest by inflation

"Over the past two years, Discount & Dollar Stores have emerged as major disruptors, diversifying both their offerings and their price points - and the category leaders' continued visit growth suggests that this strategy is helping the chains build significant strength," Lila Margalit of Placer.ai wrote in a blog post. "By investing in private label food items and stocking fresh produce at thousands of locations, Dollar General has established itself as a prime low-cost grocery destination."

Family Dollar has also made "strong inroads into the supermarket scene," according to Margalit, with everything from fruits and veggies to cage-free eggs. "Dollar Tree has also broadened its grocery selection to include an array of chilled and frozen foods," he added.

Dollar Tree reports its quarterly results before market open on Wednesday. Dollar General reports Thursday. Analysts surveyed by FactSet are looking for Dollar Tree, including Family Dollar, to report total revenue of $8.668 billion and earnings of $2.66 a share. Dollar General is expected to report revenue of $9.767 billion and earnings of $1.73 a share, according to FactSet.

Related: Costco isn't raising its membership fee. Analysts are disappointed.

The companies' conference calls will be closely monitored for comments about their supply chains. In a note released earlier this year, Wells Fargo warned that Dollar Tree is at risk from disruption caused by the Houthi attacks on Red Sea shipping. "Exposure varies across our coverage, but names with high unit velocity (dollar stores) and high discretionary mix (ocean imports) are most at risk," wrote Wells Fargo analyst Edward Kelly. "This places DLTR in the cross-hairs of another key industry issue."

BMO has also said that the Red Sea attacks add "an element of uncertainty" for food retailers including Dollar Tree and Dollar General.

But speaking during a conference call to discuss the company's fourth-quarter results last week, Costco Wholesale Corp. (COST) Chief Financial Officer Richard Galanti said that company has been asked about shipping and supply chain issues recently. "There's some delays," he said. "Generally just a couple or three weeks but mostly now planned for."

Dollar Tree's stock is up 16.2% in the last three months and Dollar General's stock is up 25.5%, compared with the S&P 500 index's SPX gain of 10.4%.

-James Rogers

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

03-11-24 1456ET

Copyright (c) 2024 Dow Jones & Company, Inc.