Discount Variety Retail Chain Dollar General hits, for the first time in company history, $40 billion in a fiscal year. The discount retailer’s fourth quarter wasn’t bad either, with $10.3 billion in net sales for a year-over-year gain of 4.5%.
Dollar General CEO Todd Vasos, however, voiced caution for 2025 during the retailer’s fourth quarter earnings call on Thursday. Vasos said the Goodlettsville, Tenn.-based company is not anticipating any improvement in the macro environment.
Fourth quarter same store sales were up 1.2% year over year, and 1.4% for fiscal year 2024. Operating profit, however, dropped 49.2% to $294.2 million. For 2025, Dollar General is projecting net sales in the growth range of 3.4% to 4.4% and same store sales growth of 1.2% to 2.2%. The retailer plans on opening 575 stores this year.
2025 looks good … but …
Dollar General is optimistic about a healthy 2025, but there are factors that have not been included in the guidance. Tariffs and a potential reduction in SNAP benefits are two factors that could come into play. DG also faces financial pressures from the store remodels as the discount retailer looks to complete all of them by the end of the third quarter. Labor costs will also play a role, as Dollar General continues to remove self-checkout areas from every store.
Efficiency is building
Improved efficiency has been a goal for DG for several months, and during the earnings call, Vasos mentioned that 1,000 SKUs have been removed from the store floor. More SKU reduction and optimization are planned for 2025. DG is also working to improve sorting and case pack optimization in distribution centers. The retailer is on the verge of completing its next-generation point-of-sale rollout, which should simplify the checkout process and other in-store activities.
Growth plans
Along with the 575 new store openings this year, Dollar General is planning to close 96 stores. Most of these are in metro areas where competition is high. They were scheduled to close once leases expired. DG, however, sees 12,000 spots for future growth. “While we won’t capture all those, we still believe there’s a lot of runway for growth within the continental United States,” said Vasos. DG also plans to build 15 stores in Mexico this year.
Project Elevate provides a lift
Project Elevate, which was announced in December, continues to progress. Project Elevate is a new incremental remodel initiative aimed at improving performance in portions of existing stores that are not old enough to be included in the regular remodeling plan. The goal for Project Elevate stores is to drive first-year comparable sales increases of 3% to 5%, while also mitigating future expenses, particularly in repairs and maintenance, as Vasos explained during the call. Projects will include physical asset refreshes and merchandising optimization, impacting about 80% of the total store.
Same-day delivery
Dollar General recently began testing same-day home delivery with DoorDash at about 400 locations, aiming to offer this service at 10,000 stores by the end of the year. Vasos said initial customer response to same-day delivery has been positive, including higher average basket sizes compared to brick-and-mortar stores. “We believe our expansive real estate footprint uniquely positions us to offer a compelling home delivery option and ultimately become the fastest delivery alternative for customers in our communities,” Vasos said.
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