Dollar General Shutters 100 Underperforming Stores to Revamp Strategy for Bigger Profits

"Bigger isn't always better" and "Quality over quantity" are catchphrases that often ring true in the business world, including the food and beverage realm. While lots of companies have the end goal of expanding and opening up lots of locations, many – including Dollar General – have learned the hard way that more stores doesn't necessarily translate to more profit. Last week, the super-saving outlet revealed that it shuttered 100 underperforming stores in recent months and is changing strategy to maximize profits. Here is what you need to know about the big shakeup.

Dollar General Closed 96 Stores

During an earnings call on Thursday, Dollar General revealed that it closed 96 underperforming stores in the fourth quarter, ending January. Most were located in urban areas and were not turning a profit. Chief Executive Todd Vasos explained that those stores, which account for less than 1% of the company's total footprint, would have likely closed when their leases expired.

The Company Will Reallocate the Money to Open New Stores and Renovate Others

He also explained that by closing them, the company is in a position to reallocate resources so it can open 590 new stores in 2025 and partially or fully remodel about 4,250 additional locations. By making these changes, he believes that sales can increase by 3.5% to 4%, with projected same-store sales up 2% to 3% in each of the next two years and total earnings up by 10% in 2026.

The Decision "Better Positions" Them to Serve Customers

"As we look to build on the substantial progress we made on our Back to Basics work in fiscal 2024, we believe this review was appropriate to further strengthen the foundation of our business," Vasos stated in the earnings release. "While the number of closings represents less than one percent of our overall store base, we believe this decision better positions us to serve our customers and communities."

Same Store Sales Were Higher Than Expected

Vasco also noted that same-store sales were up higher than expected, 1.2% after adjusting for store openings and closings. He believes this was driven by higher prices and customers buying more items each time they visited. "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," the CEO said. "As we enter 2025, we are not anticipating improvement in the macro environment."

They Believe They Are on the Right Track

"We were pleased with the underlying performance of the business in the fourth quarter, including improved execution and solid top-line results," Vasos stated in the release. "As we reflect on our full fiscal 2024 year, we believe our Back to Basics work is resonating with customers, as demonstrated by higher customer satisfaction scores and healthy market share gains."