Discount retailers face the future without stimulus

While the latest round of $ 1,400 stimulus checks issued in March may seem like an old story to some, for retailers catering to the bargain-seeking, budget-conscious consumers who received these funds, each passing day – and each quarter – is a cold reminder. that those one-time injections of money never come back.

That day when no less than three national discount and low-cost retail chains posted lagging results that were artificially – and briefly – inflated by the stimulus. How they plan to face the future without it is an entirely different story as the pressure to find new ways to keep shoppers visiting their stores and websites increases.

With more than 17,000 stores in 33 states, the $ 47 billion rebate colossus Dollar General said Thursday, May 27 that the path forward for this would include more stores, additional renovations and expansions, as well as the ongoing rollout. of its new brand concept “pOpshelf”. store that debuted last fall.

“During the first quarter, we executed over 800 real estate projects, including new store openings in our pOpshelf and larger formats from Dollar General,” CEO Todd vasos said, while noting a nearly 5 percent drop in same-store sales in the first quarter and a reduction in traffic.

“The company believes that consumer behavior, driven by government stimulus payments, has had a significant positive effect on sales of its non-consumable product categories,” the earnings release continued, while projecting a range of sales prospects improved by plus or minus 1%.

Other headwinds

For its part, the parent company of Burlington Coat Factory also recognized the tailwind effect of the relaunch in its first quarter results, but took a more cautious outlook in the face of new emerging challenges.

“Many factors have contributed to the improvement in traffic and consumer spending in the [first] quarter – including the latest stimulus checks, the pace of vaccine deployment and pent-up consumer demand, ”said CEO Michael O’Sullivan.

While the Burlington chief said the second quarter was “off to a good start,” O’Sullivan said the company was not providing sales or profit forecasts for the year given the uncertainty surrounding the pace of the market. resumption of consumer demand and the ongoing COVID. 19 pandemic.

“The future sales trend remains very difficult to predict,” said O’Sullivan. “Meanwhile, headwinds in supply chain spending and freight continued to deteriorate, and these are expected to weigh on our operating margin throughout the year.”

Like its rivals, Burlington also plans to open 100 new stores and close 25 more in an existing portfolio of 784 locations.

The tree grows

Not to be outdone, discounter Dollar Tree unveiled the most aggressive growth and transformation update of the day, in tandem with record first quarter profit and a combined 1% same-store sales growth for its Family Dollar and namesake brands compared to very strong sales a year ago.

“Looking ahead, I am very excited about the growth of Dollar Tree Plus! and our strategic store formats, to which buyers are responding positively, as evidenced by market share gains and improved customer satisfaction scores ”. Michael witynski said, while noting a record first quarter performance and the company’s best quarterly operating profit after the merger.

Witynski said the gains were due in part to a favorable sales mix and reduced markdowns which were partially offset by higher freight costs.

Going forward, the operator of nearly 16,000 locations said it plans to open 600 new stores and renovate 1,250 Family Dollar stores this year, including 400 Dollar Trees and 200 Family Dollars as well as more than its “combo store” formats.

While this store base growth will help in the long run, Dollar Tree’s annual profit and sales forecast was lower than expected, a disappointment that saw its inventory drop 12% last month.



About the study: U.S. consumers see cryptocurrency as more than just a store of value: 46 million people plan to use it to make payments for everything from financial services to groceries. In the Cryptocurrency Payments report, PYMNTS surveys 8,008 cryptocurrency users and non-users in the United States to examine how they plan to use crypto to make purchases, the crypto they plan to to use – and how merchant acceptance can influence merchant choice and consumer spending.

About Timothy Cheatham

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