Dollar General has announced a robust real estate strategy for 2025 that includes the opening of 575 stores and the remodeling of 4,250 others as it reported solid earnings for its fiscal 2024 Q3, which ended Nov. 1, 2024. The company also announced that it was testing out same-day delivery in 75 stores with plans to expand to “thousands of stores” if the test performs well.
New ‘Project Elevate’ Plan Features ‘Light-Touch’ Remodels of More Mature Stores
In the retailer’s fiscal 2025 (which ends Jan. 30, 2026), Dollar General plans to execute approximately 4,885 real estate projects, including:
- The opening of 575 new stores in the U.S.;
- Up to 15 new stores in Mexico;
- Full remodels of approximately 2,000 stores;
- Partial remodels of around 2,250 stores under the new “Project Elevate” strategy; and
- Relocating approximately 45 stores.
“We are excited about our significant increase in planned real estate projects for 2025,” said Kelly Dilts, CFO of Dollar General in a statement. “In particular, we are enthusiastic about Project Elevate, which introduces an incremental remodel initiative within our mature store base. This initiative is aimed at our mature stores that are not yet old enough to be part of the full remodel pipeline. We believe we will enhance the customer experience with a lighter-touch remodel, including customer-facing physical asset updates, planogram optimizations and expansions across the store. Ultimately, our goal is to further enhance the associate and customer experience in our mature stores, while also driving incremental sales growth.”
Remodels across Dollar General’s store fleet already are underway, with the company spending $451 million on improvements, upgrades, remodels and relocations in Q3 2024, including the opening of 207 new stores and 434 store remodels.
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Dollar General has struggled in the last year as lower-income households have pulled back on discretionary spending, while at the same time it has been fielding a host of consumer complaints about the condition of its stores. The retailer has been fined several times recently for workplace safety violations.
“We believe our balance of new store growth and a significantly increased number of projects impacting our mature store base will further solidify Dollar General as an essential partner to communities in rural America, while strengthening our foundation to drive long-term sustainable growth and shareholder value,” said Todd Vasos, CEO of Dollar General in a statement, who rejoined the company in October 2023 to “restore stability.”
DG Delivery Offers Same-Day Service from Dollar General App
On Dollar General’s Q3 earnings call Vasos also shared that the company had “soft launched” a new same-day delivery option, called DG Delivery, in approximately 75 stores.
The company already partners with DoorDash for delivery from about 16,000 of its stores, but this new service is available to customers directly in the Dollar General app. Customers placing orders through the app can get delivery as quickly as one hour, as well as use their digital coupons and other loyalty perks.
Vasos said on the call that the service relies on labor from a third-party company rather than using store associates, although he did not say which company. Vasos also touted the potential for the offering to boost the company’s retail media business, since it would drive more customers to the retailer’s app more frequently.
Solid Q3 Despite Hurricane-Related Expenses
Net sales increased 5% to $10.2 billion in Dollar General’s third quarter, compared to $9.7 billion in Q3 2023. The net sales increase was driven by positive sales contributions from new stores and growth in same-store sales, which increased 1.3% over the same quarter in 2023.
Gross profit as a percentage of net sales was 28.8% in the quarter compared to 29% in Q3 2023, a decrease that was attributed to increases in markdowns and inventory damages. So far this year the company has incurred $32.7 million in hurricane-related costs, the majority of which took the form of store inventory and property losses.
The retailer did say that it was making significant progress in reducing its shrink problem. Although executives didn’t share additional details on the specific tactics being used, shrink was the primary reason given when the company announced in June 2024 that it was removing self-checkout kiosks from most of its stores.
“We are pleased with our team’s execution in the third quarter, particularly in light of multiple hurricanes that impacted our business,” said Vasos. “While we continue to operate in an environment where our core customer is financially constrained, we delivered same-store sales near the top end of our expectations for the quarter. We believe our ‘Back to Basics’ efforts contributed to these results, as we have continued to improve our execution and the customer experience in our stores.”
