Dollar General is expanding at full steam with plans to open 975 locations in 2019, even as many other retailers pare down their footprints. However, the discount retailer isn’t immune to the effects of tariffs, and it expects to eventually pass rising prices onto customers this year.
Dollar General is coming off a successful Q1: net sales increased 8.3% and same-store sales rose 3.8%. The retailer attributed the growth to increases in both average transaction amount and customer traffic, with sales up in the consumables, seasonal and home categories and down in the apparel category.
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“We operate in the most attractive sector of retail,” said Todd Vasos, CEO of Dollar General during an earnings call. “Our core consumers continue to come in more often and spend more.”
The retailer opened 240 new stores during the first quarter, along with 330 remodels and 27 relocations. Dollar General plans to remodel 1,000 and relocate 100 locations over the course of the entire fiscal year.
While the retailer’s 2019 performance has been strong so far, tariffs are expected to create a negative impact later in the year. Dollar General is working to mitigate the impact of the 25% levy on certain Chinese goods through four methods:
- Continual negotiations with vendors;
- Product substitution;
- Product reengineering; and
- Country of origin diversification.
“We will do everything we can to minimize the effects of these tariffs on our customers, but even with these efforts we believe our shoppers will be facing higher prices as 2019 progresses,” said John Garratt, EVP and CFO of Dollar General in a statement.
Dollar General certainly isn’t the only retailer that expects to be hurt by tariffs: Dollar Tree, Kohl’s, JCPenney and Nordstrom predict that the levies will impact their future results. Target also is planning ways to work around the tariffs, but maintained its full year outlook.
