Dollar General will build larger stores and expand Popshelf brand

Dollar General doubles the stone and mortar by building larger stores and expanding Popshelf, a new chain aimed at higher-income suburban customers.

The rebate on Thursday set out aggressive plans for the financial year that called for the company to open 1,050 stores, renovate 1,750 sites and relocate 100 others.

As it builds new stores, buyers will see larger sales floors and more merchandise. They will also notice more brands for Popshelf, which the retailer will debut in the fall. The company is testing both new sites and using the brand to create a store within a store.

Sales of groceries and household necessities boosted Dollar General’s growth throughout the pandemic as consumers cooked more at home and watched their budget during a period of economic uncertainty. Its sales in the same store increased by 16.3% during the financial year.

In recent months, however, the shares of pandemic beneficiaries – including Dollar General – have fallen as investors bet that Americans will divert their dollars after eating out and traveling once they are vaccinated. During a call on Thursday, dollar general Todd Vasos earned the question of why investors should continue to bet on the company. He said the retailer can increase profits by expanding its footprint, selling more non-consumable items with higher margins than food and finding a wider range of customers.

Chief operating officer Jeff Owen says the retailer estimates he can add up to 17,000 stores across the country – a move that will roughly double his footprint.

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

As Dollar General adds, rebuilds and relocates, Owen said it will enlarge the square footage of its sales floor to provide more room for coolers of produce and fresh meat, a greater variety of health and beauty products and additional toll roads.

According to Vasos, Dollar General tested the larger store formats in 2020 and found that they outperformed the rest of the chain with higher sales. There are already larger stores with a wider variety of foods and general merchandise.

Dollar General also plans to build up to 50 Popshelf stores by the end of the financial year, more than its original target of 30, Owen said.

The retailer opened the first two Popshelf stores this fall near Nashville, Tennessee. Popshelf sells home decor, beauty products, cleaning supplies and party supplies, with almost all items costing $ 5 or less. The target customer, according to the company, has an annual household income ranging from $ 50,000 to $ 125,000 – higher than the $ 35,000 to $ 40,000 household income of a typical Dollar General customer.

Owen said the Popshelf stores offer a fun, affordable and differentiated treasure hunter experience delivered by ever-refreshing merchandise. He said the company wanted to expand faster than he had planned because of his results.

Dollar General will start a pilot merging its namesake brand and Popshelf, he said. In 25 stores, customers will see signs for both labels at the entrance. Inside, Popshelf will appear prominently in the center as a store-in-store, he said.

The tests will focus on areas where customer demographics are somewhere between Dollar General and Popshelf – with revenues of between $ 50,000 and $ 75,000, Vasos said.

“If it works – and we believe it will work – there could be some extra things we do in 2022 and many more if we continue,” he said.

Shares in the company have risen by about 21% over the past year since the end of Wednesday. They fell by less than 5% on Thursday afternoon. Earlier, the company achieved fourth-quarter earnings that missed estimates and predicted that sales in the same store would fall by 4% to 6% in the coming financial year against the extraordinarily high sales levels caused by the pandemic. Looking over a two-year period, the Dollar General forecast implies 10 to 12% annual sales profit in the same store.