Dollar stores are dealing with a mix of both economic and self-inflicted problems.
Dollar stores companies were some best performing stocks in the S&P 500 during the Great Recession, said Piper Sandler managing director Peter Keith. But over the past couple of years, dollar stores have not seen the, are under more pressure to stretch their dollars in the face of high inflation.
These shoppers are therefore looking for more consumables — like foods and household items – rather than discretionary items, which are typically more profitable. Middle-income and upper middle-income Americans are also not being forced to trade down to dollar stores as the job market has stayed In its fiscal 2024 second quarter earnings call, Dollar General said those customers are also more reliant on online storefronts, which dollar stores have had less success in rolling out."A lot of legacy brick-and-mortar companies, like a Walmart or Home Depot or Best Buy, I like to say they made about five years of e-commerce and digital investments in about 12 to 18 months during Covid, so the digital capabilities of a lot of companies have also gotten a lot better in recent years," said Keith.Feeling out of the loop? We'll catch you up on the Chicago news you need to know. Sign up for the weeklyEli Manning, Derek Jeter join TGL New York Golf Club investor group
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