Dollar General has made the decision to cut ties with less than 1 percent of the stores in its fleet.
The discount retailer announced Thursday on its 2024 earnings call that it plans to close 96 namesake stores and 45 of its Popshelf stores, which are, generally, targeted at higher-income consumers and carry home goods and decor items.
More from Sourcing Journal
The retailer did not directly disclose which of its stores will be impacted, but according to the announcement, the selected stores will close by the end of the first quarter. Dollar General said it decided on which stores it would close as part of a store portfolio optimization review it conducted at the end of 2024, which included analysis of individual stores’ performance, future projections, operating conditions and other factors.
Todd Vasos, Dollar General’s CEO, said the closures are a continuation of the company’s plan to cut unneeded cost centers and improve operational efficiencies, which it calls Back to Basics.
“While this is less than 1 percent of our overall store base, those stores, many of which are in urban locations, have become increasingly challenging to successfully operate,” Vasos said on the earnings call. “These stores likely would have been closed in the ordinary course of the store’s life cycle when their leases expired. However, we determined that closing these locations now will allow us to optimize our allocation of resources going forward.”
Dollar General also plans to convert six Popshelf stores it determined would have been “store closure candidates” into namesake Dollar General stores.
The announcement came among some positive news for the discount retailer, which reported that, for Q4 2024, its sales had increased by 4.5 percent, while its total 2024 sales increased by 5 percent to $40.6 billion. The company also reported same-store sales increased by 1.2 percent in Q4 2024, which Vasos said “was driven entirely by growth of 2.3 percent in average transaction amount.” Same-store sales track the percentage of sales that come from stores a retailer has operated for at least a year.
Despite the closures and shifts, Dollar General still has plans to open 575 namesake stores in the U.S. this year, as well as 15 stores in Mexico.
And those openings could be coming at just the right time. To date in 2025, the discount retailer seems to be benefiting some from a cash-pressed consumer worried about how economic shifts could impact prices. Vasos told investors Dollar General feels prepared to effectively handle the tariffs handed down from President Donald Trump .
“With regards to current tariffs that have been announced on products that we sell, we believe we are well positioned to mitigate the impact in 2025. We were able to successfully mitigate the tariff impact in 2018 and 2019, though we did take retail price increases in some instances, along with others across the industry,” he said. “Given the already stressed financial condition of our core customer, we are closely monitoring these and any other potential economic headwinds, including any changes to government entitlement programs.”
Vasos said Dollar General’s core consumers continue to face challenges with worsening financial situations because of continued inflation.
“Many of our customers report that they only have enough money for basic essentials, with some noting that they have had to sacrifice even on the necessities. As we enter 2025, we are not anticipating improvement in the macroenvironment, particularly for our core customer,” Vasos said.
His statement tracks with the University of Michigan’s Index of Consumer Sentiment, which shows that, in February, consumer sentiment slid down nearly 10 percent as compared with January and decreased by nearly 16 percent compared with February 2024.
Even as some retailers batten down the hatches and offer a bleak outlook for 2025, Dollar General projects that, for this fiscal year, it will see net sales growth between 3.4 and 4.4 percent, as well as same-store sales growth between 1.2 and 2.2 percent. Some of that growth could come off the back of consumers across the market opting to substitute higher-cost items with low-cost alternatives.
“What has really become apparent leaving Q4 [2024] and moving into Q1 [2025] is the trade-down is back,” Vasos told investors Thursday. “We’ll know a little bit more as we [review] Q1 here, but I would tell you nothing that we’ve seen so far would show that that trade-down has slowed down. If anything, we may have seen it accelerate a little bit in the last few weeks.”