Dollar General will open more than 1,000 stores this year and expand its Popshelf brand

KEY POINTS

  • Dollar General said it will build bigger stores and expand Popshelf, a new chain aimed at higher-income, suburban customers.
  • It plans to open 1,050 stores, remodel 1,750 sites and relocate 100 others.
  • The discounter’s shares have fallen over the past few months, as investors question if pandemic beneficiaries can sustain momentum.
  • CEO Todd Vasos told investors and analysts that the retailer will boost sales and profits by growing its footprint, selling more non-consumable items that have higher margins than food and appealing to a broader range of customers.

Dollar General is doubling down on brick-and-mortar by building bigger stores and expanding Popshelf, a new chain aimed at higher-income, suburban customers.

On Thursday, the discounter laid out aggressive plans for the fiscal year that called for the company to open 1,050 stores, remodel 1,750 sites and relocate 100 others.

As it builds new stores, shoppers will see larger sales floors and more merchandise. They’ll also notice more branding for Popshelf, which the retailer debuted in the fall. The company is testing both new locations and using the brand to create a store within a store.

Sales of grocery staples and household essentials helped drive Dollar General’s sales growth throughout the pandemic as consumers cooked more at home and watched their budget during a period of economic uncertainty. Its same-store sales rose by 16.3% in the fiscal year.

In recent months, however, shares of pandemic beneficiaries — including Dollar General — have fallen as investors bet that Americans will divert their dollars toward dining out and traveling once they get vaccinated. On a Thursday earnings call, Dollar General Todd Vasos made the case why investors should continue to bet on the company. He said the retailer can boost profits by growing its footprint, selling more non-consumable items that have higher margins than food and appealing to a broader range of customers.

Chief Operating Officer Jeff Owen said the retailer estimates it could add as many as 17,000 stores across the country — a move that would roughly double its footprint.

“Overall, our real estate pipeline remains robust and we are excited about the significant new store opportunities ahead,” he said.

As Dollar General adds, remodels and relocates stores, Owen said, it will increase the square footage of its sales floor to make more room for coolers of produce and fresh meat, a bigger assortment of health and beauty products and additional checkout lanes.

Vasos said Dollar General tested the larger store formats in 2020 and found they outperformed the rest of the chain with higher sales. It already has some larger stores with a wider assortment of food and general merchandise.

Dollar General also plans to build to 50 Popshelfstores by the end of the fiscal year, more than its original goal of 30, Owen said.

Michael Salafia
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