QUOTE AND NEWS
Jutia Group  Nov 24  Comment 
[Business Wire] - Dollar General Corporation plans to report its financial results for its fiscal 2014 third quarter ended October 31, 2014, on Thursday, December 4, 2014. In connection with the announcement, Rick Dreiling, chairman and chief...
Benzinga  Nov 21  Comment 
On CNBC's Fast Money Halftime Report Final Trade, Stephanie Link said that Dollar General Corp. (NYSE: DG) is trading higher on Friday and she thinks that it is going to continue to move higher. She has a long position in this name. Mike Murphy...
TheStreet.com  Nov 20  Comment 
NEW YORK (TheStreet) -- Dollar General shares are up 1% to $66.75 in trading on Thursday after the discount retailer said that it is still committed to purchasing rival Family Dollar  and announced that it's in talks with the FTC over how...
Jutia Group  Nov 20  Comment 
[Business Wire] - Beginning Sunday, Nov. 23, Dollar General will celebrate eight days of exclusive holiday savings on gifts, toys, electronics, clothing, décor, baking and more for every holiday nee Read more on this. Dollar General Corporation...
Benzinga  Nov 19  Comment 
Dollar General Corporation (NYSE: DG) today affirmed its commitment to the acquisition of Family Dollar Stores, Inc. (NYSE: FDO). Dollar General is actively engaged in discussions with the Federal Trade Commission (“FTC”) regarding the...
TheStreet.com  Nov 19  Comment 
NEW YORK (TheStreet) -- Shares of discount retailers Dollar General  and Dollar Tree set all-time highs this week. Each has traded as a momentum stock on speculation that it might emerge the winner in their battle to acquire smaller rival...
Forbes  Nov 19  Comment 
In early trading on Wednesday, shares of Staples (SPLS) topped the list of the day's best performing components of the S&P 500 index, trading up 7.6%.  Year to date, Staples has lost about 13.6% of its value.
Jutia Group  Nov 19  Comment 
[Reuters] - Dollar General Corp may need to divest more than 4,000 stores to win approval from the U.S. Federal Trade Commission for its acquisition of Family Dollar Stores Inc , the New York Post reported, citing ... Read more on this. Dollar...
Clusterstock  Nov 19  Comment 
(Reuters) - Dollar General Corp may need to divest more than 4,000 stores to win approval from the U.S. Federal Trade Commission for its acquisition of Family Dollar Stores Inc , the New York Post reported, citing two sources close to the...




 
TOP CONTRIBUTORS

Dollar General Corporation (NYSE: DG) is the largest discount retailer in the United States by number of stores.[1] Dollar General competes with other discount retailers, such as Family Dollar Stores (FDO) and Dollar Tree Stores (DLTR), as well as wholesale retailers such as Wal-Mart (WMT) and Target (TGT). In fiscal 2010, DG posted net sales of $13 billion and net income of $627.9 million.

Discount retailers are poised to succeed during recessionary economic conditions, as consumers try to buy their everyday items at lower prices. Dollar stores struggle when operating costs increase, as such stores cannot raise prices of goods sold, and thus cannot pass costs on to consumers. The increased demand for discount retailers has exceeded costs of operations, which has lead to Dollar General to have double-digit net sales growth in each of its last two fiscal years.

Company Overview

Business Growth

Dollar General launched its Initial Public Offering (IPO) in November 2009, selling $34.1 million shares at $21 per share.[2]

Fiscal Year 2010 (ended January 28th, 2011)

  • DG posted net sales of $13 billion, a 10.5% increase compared to fiscal 2009.[1]
  • Net income increased 85% to $627.9 million.[1]

Business Segments

  • Consumables (71.6% of fiscal 2010 net sales)[1]
  • Seasonal (14.5%)
  • Home Products (7.0%)
  • Apparel (6.9%)

Geographic Presence

Dollar General operates only in the United States. The firm has 9,414 retail stores located in 35 states, with the top 10 states (by number of stores) listed below:

  • Texas (1,080 stores)
  • Georgia (541)
  • Alabama (512)
  • Florida (505)
  • Ohio (510)
  • North Carolina (536)
  • Tennessee (489)
  • Pennsylvania (421)
  • South Carolina (375)
  • Louisiana (369)

Trends and Forces

Discounters Experience Difficulty Passing on Cost Increases to Customers

Because Dollar General’s low-income customer base is highly sensitive to price and because the company competes largely with merchandise prices fixed to be under $2, input cost increases (such as inventory, overhead, and marketing) are difficult or impossible to pass on to consumers. Although the company has been able to raise some prices - changing an item that was 2 for $1 to 59 cents apiece, for example - the prices of the vast majority of its goods cannot be increased. Macroeconomic and company specific changes to cost structure, including higher freight costs, rising energy prices, and supplier or distributor consolidation increases the risk of large margin decreases that cannot be offset by price increases.

Stiff Competition and Low Competitive Advantages in a Mature and Saturated Market

Family Dollar competes against discounters with wider selection and significant cost and scale advantages in its local markets. A Family Dollar store operating within a few miles of a nearby Wal-Mart or Target, for instance, will struggle to compete on value and selection, and may instead gain customers via convenience and location. It also faces competition faces other “dollar stores,” that have similar or identical value propositions, such as Dollar Tree Stores (DLTR), Family Dollar Stores (FDO), and 99 Cents Only Stores (NDN). With low barriers to entry and few natural competitive advantages to gain, the industry has become flooded with dollar stores and collectively, these companies are approaching U.S. saturation. While Family Dollar has some competitive advantage in the southern US states, there is substantial risk of lower margins due to increased overhead expenses as well as stiff competition as other discounters pursue the same strategies.

Dollar General Thrives During Economic Crisis

Dollar General sells similar products as wholesale retailers Wal-Mart (WMT) and Target (TGT), but typically at lower prices. Because of this, during harsh economic conditions, many consumers may make the change of shopping at Dollar General instead of a regular wholesale retailer.

Competition

Off-Price Retailers

  • Dollar Tree Stores (DLTR) Dollar Tree operates 3,806 stores in the United States. The company sells all of its products for $1.[3]
  • Family Dollar Stores (FDO) Family Dollar offers similar products as DG and also sells all of them for $1.
  • 99 CENTS ONLY STORES (NDN) 99 CENTS ONLY STORES operates 275 stores in the United States. The company sells all of its products for 99 cents or less. Food and grocery sales account for more than half of the company's annual revenue.[4]

Wholesale Retailers

  • Wal-Mart (WMT) Wal-Mart sells brand-name products that DG sells, and at higher prices.
  • Target (TGT) Target sells brand-name products that DG sells, and at higher prices.
  • Costco Wholesale (COST) Costco offers similar products as DG, but in bulk quantities.

References

  1. 1.0 1.1 1.2 1.3 DG 2010 10-k
  2. Reuters, "Dollar General IPO prices at low end," 11/12/2009
  3. DLTR 2009 10-K pg. 8
  4. NDN 2010 10-K pg. 3
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