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Dollar General (DG) Thrives on Robust Business Model, Pricing
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Dollar General Corporation (DG - Free Report) remains a compelling growth story in the retail space. Due to its value-creating initiatives, defensive product mix and real estate growth strategy, the company has the capability to gain market share.
Moreover, its commitment to better pricing, private label offerings, effective inventory management and merchandise initiative should drive sales. The company’s everyday low-price model is attracting customers who have been seeking value and convenience amid soaring inflation.
Customer-Oriented Efforts
Dollar General’s initiatives such as DG Fresh, Fast Track, non-consumables, digitization and private fleet should benefit the top line. The company has been sparing no effort to bolster omnichannel operations and ramp up delivery services to provide customers with a frictionless shopping experience. Its partnership with DoorDash continues to yield results, with same-day delivery now available at more than 13,000 stores at the end of the third quarter of fiscal 2022.
Talking about the company’s transformational initiatives, DG Fresh is designed to enable the self-distribution of fresh and frozen products. Meanwhile, Fast Track aims at increasing labor productivity in stores, enhancing customer convenience and improving on-shelf availability.
Under DG Fresh, the company has been expanding its cooler facilities to enhance the sale of perishable items. In the third quarter, the company installed more than 17,000 cooler doors across its store base and plans to install more than 65,000 cooler doors in fiscal 2022. The company completed the initial rollout of DG Fresh across the entire chain and is now delivering to nearly 19,000 stores from 12 facilities.
With respect to Fast Track, the company has been expanding its self-checkout facility, which was available in more than 10,500 stores at the end of the third quarter. The company plans to expand this offering to a total of up to 11,000 stores by the end of the current fiscal year.
Additionally, the non-consumable initiative offering was available in more than 16,000 stores. The company plans to complete the rollout of the non-consumable initiative offering across the entire chain by the end of fiscal 2022.
Image Source: Zacks Investment Research
pOpshelf Store Concept Looks Promising
Dollar General, through its pOpshelf stores, targets affluent customers looking for better bargains. In the third quarter, the company opened 23 new pOpshelf locations, which took the total count to 103.
Additionally, at the end of the quarter, the company had a total of 40 store-within-a-store concepts, a smaller pOpshelf store in Dollar General’s larger-format stores. Management reaffirmed its plan to nearly triple the pOpshelf store count, which would result in about 150 stand-alone pOpshelf locations by the end of fiscal 2022.
Further, the company plans to nearly double the pOpshelf store count next year. The company’s real estate plans for fiscal 2023 include opening approximately 150 additional locations. These will bring the total number of pOpshelf stores to about 300 by the end of fiscal 2023. The company is targeting approximately 1,000 pOpshelf stores by the end of fiscal 2025.
Wrapping Up
Dollar General’s differentiated product range resonates well with customers’ spending habits. The company is making every effort to enhance guests’ experience via unique store concepts, affordable and convenient assortment and other innovations.
Dollar General expects net sales growth of about 11% — including an estimated benefit of approximately two percentage points from the 53rd week — for fiscal 2022. The company now foresees same-store sales growth toward the upper end of its earlier projected range of 4-4.5% for the fiscal year 2022.
Shares of this Zacks Rank #3 (Hold) company have risen 3.9% in the past year against the industry’s decline of 13.9%.
The Zacks Consensus Estimate for Build-A-Bear Workshop’s current financial-year revenues and EPS suggests growth of 11.9% and 21.5%, respectively, from the year-ago reported figures. Build-A-Bear Workshop has a trailing four-quarter earnings surprise of 14.7%, on average.
Arhaus, a lifestyle brand and premium retailer in the home furnishing market, carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 14.3%.
The Zacks Consensus Estimate for Arhaus’ current financial-year revenues and EPS suggests growth of 49.1% and 21.7%, respectively, from the year-ago reported figures. Arhaus has a trailing four-quarter earnings surprise of 112%, on average.
Ulta Beauty currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 13.8%.
The Zacks Consensus Estimate for Ulta Beauty’s current financial-year sales suggests growth of 15.7% from the year-ago period. This beauty retailer and the premier beauty destination for cosmetics, fragrance, skincare products, hair care products and salon services has a trailing four-quarter earnings surprise of 26.2%, on average.
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Dollar General (DG) Thrives on Robust Business Model, Pricing
Dollar General Corporation (DG - Free Report) remains a compelling growth story in the retail space. Due to its value-creating initiatives, defensive product mix and real estate growth strategy, the company has the capability to gain market share.
Moreover, its commitment to better pricing, private label offerings, effective inventory management and merchandise initiative should drive sales. The company’s everyday low-price model is attracting customers who have been seeking value and convenience amid soaring inflation.
Customer-Oriented Efforts
Dollar General’s initiatives such as DG Fresh, Fast Track, non-consumables, digitization and private fleet should benefit the top line. The company has been sparing no effort to bolster omnichannel operations and ramp up delivery services to provide customers with a frictionless shopping experience. Its partnership with DoorDash continues to yield results, with same-day delivery now available at more than 13,000 stores at the end of the third quarter of fiscal 2022.
Talking about the company’s transformational initiatives, DG Fresh is designed to enable the self-distribution of fresh and frozen products. Meanwhile, Fast Track aims at increasing labor productivity in stores, enhancing customer convenience and improving on-shelf availability.
Under DG Fresh, the company has been expanding its cooler facilities to enhance the sale of perishable items. In the third quarter, the company installed more than 17,000 cooler doors across its store base and plans to install more than 65,000 cooler doors in fiscal 2022. The company completed the initial rollout of DG Fresh across the entire chain and is now delivering to nearly 19,000 stores from 12 facilities.
With respect to Fast Track, the company has been expanding its self-checkout facility, which was available in more than 10,500 stores at the end of the third quarter. The company plans to expand this offering to a total of up to 11,000 stores by the end of the current fiscal year.
Additionally, the non-consumable initiative offering was available in more than 16,000 stores. The company plans to complete the rollout of the non-consumable initiative offering across the entire chain by the end of fiscal 2022.
Image Source: Zacks Investment Research
pOpshelf Store Concept Looks Promising
Dollar General, through its pOpshelf stores, targets affluent customers looking for better bargains. In the third quarter, the company opened 23 new pOpshelf locations, which took the total count to 103.
Additionally, at the end of the quarter, the company had a total of 40 store-within-a-store concepts, a smaller pOpshelf store in Dollar General’s larger-format stores. Management reaffirmed its plan to nearly triple the pOpshelf store count, which would result in about 150 stand-alone pOpshelf locations by the end of fiscal 2022.
Further, the company plans to nearly double the pOpshelf store count next year. The company’s real estate plans for fiscal 2023 include opening approximately 150 additional locations. These will bring the total number of pOpshelf stores to about 300 by the end of fiscal 2023. The company is targeting approximately 1,000 pOpshelf stores by the end of fiscal 2025.
Wrapping Up
Dollar General’s differentiated product range resonates well with customers’ spending habits. The company is making every effort to enhance guests’ experience via unique store concepts, affordable and convenient assortment and other innovations.
Dollar General expects net sales growth of about 11% — including an estimated benefit of approximately two percentage points from the 53rd week — for fiscal 2022. The company now foresees same-store sales growth toward the upper end of its earlier projected range of 4-4.5% for the fiscal year 2022.
Shares of this Zacks Rank #3 (Hold) company have risen 3.9% in the past year against the industry’s decline of 13.9%.
Stocks to Consider
Here we have highlighted three better-ranked stocks, namely Build-A-Bear Workshop (BBW - Free Report) , Arhaus (ARHS - Free Report) and Ulta Beauty (ULTA - Free Report) .
Build-A-Bear Workshop, which operates as a multi-channel retailer of plush animals and related products, sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Build-A-Bear Workshop’s current financial-year revenues and EPS suggests growth of 11.9% and 21.5%, respectively, from the year-ago reported figures. Build-A-Bear Workshop has a trailing four-quarter earnings surprise of 14.7%, on average.
Arhaus, a lifestyle brand and premium retailer in the home furnishing market, carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 14.3%.
The Zacks Consensus Estimate for Arhaus’ current financial-year revenues and EPS suggests growth of 49.1% and 21.7%, respectively, from the year-ago reported figures. Arhaus has a trailing four-quarter earnings surprise of 112%, on average.
Ulta Beauty currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 13.8%.
The Zacks Consensus Estimate for Ulta Beauty’s current financial-year sales suggests growth of 15.7% from the year-ago period. This beauty retailer and the premier beauty destination for cosmetics, fragrance, skincare products, hair care products and salon services has a trailing four-quarter earnings surprise of 26.2%, on average.