Dollar General: Customers Can Only Afford ‘Basic Necessities’

Dollar General is expecting its customers to face deteriorating financial conditions this year.

“Our customers continue to report that their financial situation has worsened over the last year, as they have been negatively impacted by ongoing inflation,” Todd Vasos, CEO of the discount retailer, said during a fourth-quarter earnings call Thursday (March 13). “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 macro environment, particularly for our core customer. In turn, we know our customers expect value and convenience more than ever.”

The need for value helped drive a sales increase during the quarter and full year, according to an earnings press release. Fourth quarter net sales were up 4.5% to $10.3 billion, while fiscal year net sales rose 5% to $40.6 billion.

Vasos addressed the President Donald Trump administration’s ongoing tariffs during the call, saying the company is “well positioned to mitigate” their impact, having been able to do so in 2018 and 2019.

“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 during the call.

There are signs of consumer pullback in the economy. Airlines are lowering their earnings guidance based on weaker bookings and retailers are projecting declining sales for the year.

“The banks and the payment networks have yet to chime in — if they are going to do so in advance of their official earnings reports,” PYMNTS wrote Wednesday (March 12). “But connecting the dots indicates that as consumers eye an uncertain macro environment and a volatile job market — along with expectations that inflation will ramp (and credit access deteriorates) — they will pull back on spending, denting transaction volumes for the issuers and the networks.”

In addition to its earnings, Dollar General also announced plans to close 96 of its main stores and 45 of its pOpshelf stores, which cater to high-income shoppers. The retailer will convert six pOpshelf stores into regular Dollar General locations.

“While this is less than 1% of our overall store base, those stores, many of which are in urban locations, have become increasingly challenging to successfully operate,” Vasos said during the 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.”