GOODLETTSVILLE, Tenn. — Dollar General reported that a portfolio review and store closings cut into profits in the fourth quarter, and said it foresees continuing struggles among its core shoppers to afford necessities.
“Our customers continue to report that their financial situation has worsened over the last year, as they have been negatively impacted by ongoing inflation,” Todd Vasos, Dollar General’s chief executive officer, said on a March 13 earnings call. “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. As we enter 2025, we are not anticipating improvement in the macroenvironment, particularly for our core customer.”
Dollar General reported that net sales in the fourth quarter ended January 31 increased 4.5% from a year earlier. For the full year, net sales rose 5%.
Same-store sales were up 1.2% in the fourth quarter and 1.4% for fiscal 2024.
The retailer posted fourth quarter net income of $191 million, or 87 cents per share, compared with net income of $402 million, or $1.83 per share, a year prior.
Operating profit for the quarter declined by nearly 50% to $294 million. Fiscal year operating profit declined nearly 30% to $1.7 billion.
Profits in the latest quarter were hampered by charges of $232 million associated with its store portfolio review, primarily due to store closures and pOpshelf impairment.
For fiscal 2025, the company expects net sales growth in the range of 3.4% to 4.4%. Management projects same-store sales growth in the range of 1.2% to 2.2%, and diluted earnings per share in the range of $5.10 to $5.80. Capital expenditures, including those related to investments in the company’s strategic initiatives, are expected in the range of $1.3 billion to $1.4 billion.
Dollar General said it is reviewing its business to identify opportunities to strengthen its financial foundation.
“With this in mind, we conducted a real estate portfolio optimization review of both our Dollar General and pOpshelf banners during the fourth quarter,” Vasos said. “While the number of closings represents less than 1% of our overall store base, we believe this decision better positions us to serve our customers and communities.”
Dollar General said it is closing 96 Dollar General stores and 45 pOpshelf stores, and will convert six other pOpshelf stores into flagship banner locations. This will leave 180 stores remaining as part of the pOpshelf banner.
DG has been moving more cautiously on its pOpshelf rollout — seen as a path for expansion into the suburbs — in light of format’s core offering in nonconsumables, making it more susceptible to weakness in discretionary spending.
“As we enter 2025, we are optimistic about the pOpshelf banner and our opportunity to drive improvements in our sales results as customers’ feedback on the brand and shopping experience continue to be strong,” Vasos said on the earnings call. “Going forward, we plan to build on the strength to increase sales through a variety of initiatives centered around new brand partnerships and enhanced in-store experience, new and expanded categories and a new loyalty and digital experience. As an example of these efforts, we recently implemented a new store layout with a heightened focus on toys, party, candy and the beauty categories. While still early, we have been pleased with the results as we have seen a nice double-digit sales lift across a broad array of our pOpshelf stores. In addition to the opportunity to increase sales and ultimately realize further growth in the pOpshelf banner, we are also able to leverage learnings from this banner and apply them in our nonconsumable categories in our Dollar General stores to further strengthen that offering for our DG customers.”
Dollar General is reiterating that store openings will remain central to its growth strategy. The discount retailer plans to execute approximately 4,885 real estate projects in fiscal 2025, including opening approximately 575 new stores in the United States and up to 15 new stores in Mexico. Plans also call for fully remodeling about 2,000 stores, remodeling about 2,250 stores through Project Elevate, an initiative aimed at enhancing the customer experience in more mature stores through “light-touch” remodels. The project involves updating customer-facing physical assets, optimizing store layouts and expanding planograms.
“We know our customers expect value and convenience more than ever,” Vasos said. “We are committed to providing the value they need, and continue to feel very good about our everyday low price position” relative to competitors and other classes of trade.
With consumers looking for more ways to save on their weekly food and household essentials purchases, Dollar General announced during the fourth quarter that it is leveraging its private brands, digital savings tools and $1 product offerings to meet shoppers’ needs for value and convenience.
Dollar General’s private brands have become a cornerstone of its cost-saving strategy. The company offers more than 3,200 private label products in categories such as food, health, personal care and pet supplies, all backed by a 100% satisfaction guarantee. Notable brands include Clover Valley for food and beverages, DG Health for over-the-counter medications, and TrueLiving for household essentials.
In fiscal 2023, Clover Valley emerged as the company’s top-performing brand, surpassing $2.3 billion in retail sales. The brand continues to grow, with Dollar General planning to introduce approximately 100 new private label items in the first quarter of 2025. These additions will include pantry staples such as salad dressings, apple cinnamon fruit bars and ice cream, as well as specialty products like sugar-free breakfast syrup and caramel coffee enhancers.
“Our customers can’t afford to make mistakes when shopping,” said Angela Martin, vice president of consumer insights and branding. “They need products that deliver value without compromising on quality.”
