Shoppers are still making their way to Dollar General and piling up on food to cook at home. The discount retailer reported earnings Thursday that beat Wall Street expectations, saying customers are buying groceries and other essentials. But Dollar General said consumers are holding back purchases of home products, clothing, and seasonal items as inflation lingers.
Dollar General stock initially jumped 9% during pre-market trading Thursday morning following its fourth quarter earnings report, before giving back some of those gains to trade up more than 4.5%.
The Goodlettsville, Tennessee-based Dollar General beat Wall Street’s earnings expectations despite revenue for the quarter declining. The company generated revenue during the holiday-quarter of $9.9 billion, or earnings of $1.83 per share. Analysts had expected revenue of $9.78 billion, or $1.74 per share.
Dollar General warned of a subdued fiscal 2024 outlook, due in part to a smaller labor force and less inventory. The company expects same-store sales to grow between 2.0% and 2.7%, with earnings per share between a range of $6.80 and $7.55.
Even so, the discount retailer is eyeing expansion. During the 2024 fiscal year, it plans to open approximately 800 new stores, remodel 1,500, and relocate 85.
That’s in stark contrast to its competitor Dollar Tree, which said Wednesday that it would close almost 1,000 Family Dollar locations this year. Dollar Tree has an estimated 16,000 stores.
In February, Dollar General crossed the 20,000-store threshold as it opened a new location in Alice, Texas.
Even as the 85-year-old Dollar General is eyeing an expansion, the retailer still faces a long road ahead as it aims to bring back workers following a slew of penalties related to worker safety. In December, the company said it would spend an additional $50 million on its labor force. With that addition, the company’s investment in labor would total roughly $150 million.
In October, Dollar General said it would bring back its former chief executive officer, Todd Vasos. During his tenure, Vasos contributed to the company’s expansion of about 7,000 new stores.