Dollar stores continue to increase food and beverage offerings

A story in Supermarket News earlier this month reports that Dollar General and Dollar Tree are pushing ahead with plans to increase their food and beverage offerings.

Dollar General

Dollar General reported that consumable sales rose significantly in the quarter ending May 4, which helped the company fuel a gain in total sales as well as same-store sales compared to the same quarter a year ago.

"We recently launched a better-for-you offering intended to provide our customers with healthier consumable options at affordable prices," said Dollar General CEO Todd Vasos. "Over time, we expect this offering to include more than 130 products."

Vasos also said the company will roll out Good & Smart, a new private label that will represent about 75% of the better-for-you product portfolio.

Furthermore, Dollar General plans to remodel locations with fewer than 12 cooler doors, as Vasos anticipates that the entire store base will have an average of 20 cooler doors by the end of fiscal 2018 (up from an average of 10 cooler doors in 2012).

The company plans to open 900 new stores this fiscal year, remodel 1,000 mature stores and relocate about 100 stores. Dollar General has nearly 15,000 stores in 44 states.

Dollar Tree

Dollar Tree President and CEO Gary Philbin reported that the company plans to expand its Snack Zone concept, which is designed to provide customers with an assortment of consumption products at the dollar price point to drive incremental sales.

The chain added Snack Zones to 214 stores in the most recent quarter, and plans to bring it to 750 more stores in fiscal 2018.

"Our customers are excited with the introduction of the Snack Zone - great values across categories of cold beverages, candy and snack cakes, salty treats and other favorites that bring our customers back to those treats they crave," explained Philbin.

At Dollar Tree's Family Dollar stores, consumables have been a focus in store remodels. Remodeled stores have expanded beverage and snack stands, and an added assortment of food in coolers and freezers.

Dollar Tree has nearly 15,000 stores (Dollar Tree and Family Dollar combined).

Walmart reacting to Lidl with aggressive pricing

Reports state that Walmart is reacting "quickly and aggressively" to Lidl's entry into the U.S. market. According to its website, Lidl now has 21 stores open in three states - North Carolina, South Carolina and Virginia - with plans in the next year for as many as 100 more in states from New Jersey to Georgia.

Since its first U.S. stores opened in June, Lidl has been hailed as the low price leader along with rival Aldi. But according to Rupesh Parikh, an analyst at Oppenheimer & Co., "Walmart is being really aggressive in terms of watching what Lidl, and presumably Aldi, are doing, and you can tell they are in a fight and not willing to give up customers."

"We found Walmart prices on like-for-like items were very compettive with both Lidl and Aldi," Parikh said.

Parikh also reported that several other retailers in current Lidl markets were reacting with lower prices, including Food Lion, Family Dollar, Dollar General and Target. The most aggressive pricing by all the food retailers has been in the private label category, which Parikh believes could lead to higher margins on other products in order to keep overall profits from falling.

Lidl's next U.S. market is likely to be Texas, where the German company recently opened a number of offices.

Dollar Tree adds 8 Philly area stores

Dollar Tree announced earlier this month that it plans to open eight new stores in Philadelphia and the Pennsylvania suburbs. The new stores are in the following locations.

Bensalem, PA
Fairless Hills, PA
Levittown, PA
Southampton, PA
Chester, PA
Woodlyn, PA
Philadelphia, PA (Morrell Ave.)
Philadelphia, PA (Broad St.)

The company has been in expansion mode ever since it finalized its deal last year to purchase Family Dollar.

Dollar Tree to sell 330 stores

Dollar Tree announced last month that it will sell 330 stores to private equity firm Sycamore Partners, which will operate the stores under the Dollar Express banner. Dollar Express was a Philadelphia-based company that was acquired by Dollar Tree in 2000.

The sale addresses regulatory concerns brought about by the planned merger between Dollar Tree and Family Dollar. The combined Dollar Tree - Family Dollar company will consist of approximately 13,000 stores and create the largest retailer in the dollar store sector.

Dollar General plans for aggressive expansion

Dollar General announced in March that it achieved record results and plans to accelerate its store expansion plan by opening 730 new stores in 2015 and remodeling 875 others. The company opened 700 news stores in 2014.

The announcement came shortly after Dollar General's failed attempt to acquire Family Dollar, with whom Dollar Tree reached an agreement to merge.

Dollar General's sales increased 8% to $18.9 billion in 2014, and same store sales increased 2.8%. Net income increased to $1.065 billion, compared to $1.025 billion in the prior year.

Family Dollar approves deal with Dollar Tree

It was announced this morning that Family Dollar shareholders approved the proposed $8.5 billion merger with Dollar Tree, ending months of speculation over whether Dollar Tree or Dollar General would merge with Family Dollar.

According to reports, the combined companies will operate more than 13,000 stores in 48 states and Canada, with sales of more than $18 billion.

As previously reported (and blogged about: Family Dollar rejects Dollar General's higher offer, to pursue deal with Dollar Tree; and Dollar General not giving up on Family Dollar acquisition), Dollar General offered $9.7 billion, but in order to approve such a deal, the Federal Trade Commission would require about 4,000 store divestitures, compared to about 300 for the deal approved today.

After Family Dollar twice delayed the shareholder vote, Dollar Tree threatened to walk away from its offer if the deal wasn't approved this week.

The companies expect the deal to close as early as March. Dollar Tree CEO Bob Sasser will lead the merged company, with Family Dollar CEO Howard Levine reporting to Sasser.

Dollar General may be out of the bidding for Family Dollar

It was reported earlier this week that analysts believe Dollar General may be dropping its bid for Family Dollar. The reason cited is the Federal Trade Commission's requirement for up to 4,000 store divestitures as a result of a deal between the two companies. A deal between Family Dollar and Dollar Tree would require only about 310 store closures.

According to Family Dollar Chairman and CEO Howard Levine, "The Family Dollar board of directors continues to be of the unanimous view that the current Dollar General proposal is not reasonably likely to be completed on the terms proposed."

Given that Dollar General hasn't increased its store divestiture commitment or its purchase price, one analyst concludes that they are effectively bowing out of the process.

 

Dollar General not giving up on Family Dollar acquisition

Dollar General CEO Rick Dreiling said earlier this month that his company remains committed to acquiring Family Dollar, who has already agreed to be purchased by Dollar Tree, pending government approval. (See Family Dollar rejects Dollar General's higher offer, to pursue deal with Dollar Tree.)

Dreiling said Dollar General expects to provide Family Dollar shareholders with an update on its offer prior to Family Dollar's December 23 shareholder meeting.

According to an industry analyst cited in a Supermarket News story, "From an economic perspective, Dollar General has room to raise its bid, although unless it has very good visibility on the Federal Trade Commission's thinking on store divestitures, there would likely be a limit beyond which it could go."

Over the summer, Dollar Tree offered $8.5 billion for Family Dollar Stores, which was followed by Dollar General's $9.2 billion cash offer. Family Dollar chose to pursue the Dollar Tree bid, stating that "a transaction with Dollar General has a high likelihood of not closing due to antitrust considerations."

Family Dollar rejects Dollar General's higher offer, to pursue deal with Dollar Tree

Last week I blogged about Dollar Tree's $8.5 billion deal for Family Dollar Stores, which was followed by Dollar General's $9.2 billion cash offer for the same company. A few days ago Family Dollar rejected the higher offer and said it will pursue its prior agreement with Dollar Tree, citing antitrust considerations.

Dollar General said it would be willing to divest up to 700 stores to make the merger with Family Dollar feasible, but Dollar General said it "will not jeopordize the Dollar Tree deal for a transaction with Dollar General that has a high likelihood of not closing due to antitrust considerations."

According to experts and analysts, the saga isn't over, as they believe Dollar General may have expected the negative response and may even be preparing to increase their offer, an offer that could top $10 billion.

Dollar General and Dollar Tree fighting for Family Dollar Stores

In late July it was announced that Dollar Tree would buy competitor Family Dollar Stores in a cash and stock deal worth $9.2 billion, and that both companies unanimously approved the merger. However, reports today said that Dollar General offered $9.7 billion in cash for Family Dollar.

Today's move by the top dollar store in the U.S. is widely seen as a defensive move, as a Family Dollar - Dollar Tree combo would represent a long term market share threat. However, some analysts expect Dollar Tree to make a counteroffer, since the acquisition would do more to transform Dollar Tree's business than it would for Dollar General, which is more similar to Family Dollar.

According to a Bloomberg story, the combined Dollar General - Family Dollar company would need to sell as many as 700 stores to gain antitrust approval. Still, the result would be about 20,000 locations, making it the nation's largest retail chain in terms of locations.

Currently, Dollar General is the largest dollar store chain, followed by Family Dollar and Dollar Tree. 

Family Dollar to close 370 stores, slow growth and layoff workers

Family Dollar announced earlier this month that it plans to close 370 of its 8,100 stores in the second half of the year, and to slow down store growth to about 400 per year, starting next year.

The company also said it would try to boost traffic by cutting prices on about 1,000 items, and to increase profits by cutting jobs. CEO Howard R. Levine said he hopes these efforts will result in annual savings of $45 million.

Family Dollar posted a 6.1 percent decrease in net sales for the fiscal second quarter (ended March 1) compared to the same quarter a year ago, and net income fell from $140.1 million to $90.9 million.

Family Dollar adding 400 food items to its grocery section

Family Dollar reported last week that it plans to add more than 400 new food items to its grocery section and reduce prices on 1,000 other items as it seeks to increase store traffic and sales.

Family Dollar currently operates about 8,100 stores, and customers across the country (like myself) still think the following dollar store dialog is funny:

Customer: How much does this item cost?
Cashier: A dollar.
Customer: How about this item?
Cashier: A dollar.
Customer: Is this one a dollar?
Cashier: Yes.
Customer: How much is...
Cashier: A dollar!

Dollar Tree reports sales increase; won't add tobacco

Dollar Tree announced last week that its net earnings improved by 10.2% in the fourth quarter as compared to the same period a year ago. A 15.4% sales increase was a major factor, along with a slight improvement in margins and an extra week in the quarter. Comparable-store sales for the quarter increased 2.4%.

In addition, Dollar Tree announced that unlike Dollar General and Family Dollar, it would not roll out tobacco in its stores. Instead the company will add frozen and refrigerated foods to another 475 stores in 2013.

For the full fiscal year that ended on February 2, Dollar Tree's sales improved 11.5% to $7.4 billion, and net income increased 8.4% to $619.3 million.

National chain expansion hits five-year high

According to a report issued by RBC Capital Markets, demand for retail space in the U.S. hit a five-year peak at the end of 2012, with nearly 82,000 stores scheduled to open within two years. According to Analyst Rich Moore, many of the chains with expansion plans are national retailers looking to fill small shop spaces in open-air community and power centers.

The reports says that the retailers planning the most new stores are Subway, Dollar General, Five Guys and Family Dollar, in that order.

Food sales boost Family Dollar earnings

Family Dollar reported fiscal fourth quarter earnings yesterday and announced that expanded selections of food played a large part in their sales gains. Overall consumables sales increased by 16% compared to the same period one year ago, with food experiencing double-digit comp-store sales growth.

Net income for the quarter increased 1.4% to $80.9 million, with total sales of $2.4 billion. Total sales increased 10.8% and overall comp-store sales increased 5.4%.

For the full fiscal year ended August 25, the company posted $422.2 million in earnings on $9.3 billion in sales. Compared to the previous year, earnings were up 8.7% and sales increased 9.2%. 

Family Dollar opened 475 stores in fiscal 2012 and expects to open 500 new stores in the current fiscal year.

Family Dollar to sell more refrigerated and frozen foods

Family Dollar reported yesterday that they plan to continue to increase their assortment of food offered for sale, including a greater selection of refrigerated and frozen foods. Largely as a result of the company's partnership with McLane Co., Family Dollar said it added 150 food SKUs in February and expects to add 250 more by the end of July.

The SKUs added - or soon to be added - include the Pepsi line of products, as well as items like cheese, baby foods, snacks and drinks. In addition, Family Dollar increased the number of coolers at about 700 stores so far this year, and plans to add them in 700 more stores by the end of the summer.

The company reported that net income for the most recent quarter rose approximately 12% to $124.5 million. Sales increased 9.6% and comp-store sales rose 5%.

Number of dollar stores surpasses number of drugstores in the U.S.

A new report from Colliers International says the U.S. now has more dollar stores than drugstores. The four big national dollar store chains - Dollar General, Dollar Tree, Family Dollar and 99 Cents Only - have approximately 21,500 locations. The three big drugstore chains - Walgreens, CVS and Rite Aid - have approximately 19,700 locations.

According to the report, the recession led consumers to dollar stores instead of drugstores and supermarkets. In addition, dollar stores are often willing to go in small markets, where a big supermarket or drug store (which often has "onerous real estate requirements") may not be willing to go.

The Colliers report says all four dollar store chains are expected to continue adding stores throughout 2012.

Family Dollar plans 450-500 new stores in 2012

Family Dollar, which operates over 7,000 stores nationwide, said it plans to open 450 - 500 new stores in fiscal 2012. The Charlotte, NC-based company posted a strong profit in its most recent quarter and cited high demand for food and other essentials as big factors in both its quarterly results and future growth plans.

Analysts say that dollar stores like Family Dollar, Dollar Tree and Dollar General have been taking customers from Wal-Mart by offering name-brand items at lower prices, even though customers may pay more per ounce than they would when buying larger packs at major chain stores.

Wal-Mart has posted nine consecutive quarters of declining same-store sales and is fighting to win back customers lost to dollar and discount stores.