Dollar General sees shift in customer behavior

Core Insights - The economy is experiencing a K-shaped recovery, with lower- and middle-income households facing challenges due to a weakening job market and rising inflation, leading to a shift in consumer spending from discretionary to essential purchases [1] Company Performance - Dollar General has reported strong third-quarter results, with revenue increasing by 4.6% year-over-year to $10.65 billion and same-store sales rising by 2.5%, benefiting from higher customer foot traffic across all income levels [2][5] - The company's share price surged by 14% following the better-than-expected financial results [2] Business Strategy - Dollar General is focused on transforming its business to boost sales, which includes opening new stores, remodeling existing locations, reducing shelf clutter, and hiring more employees [3] - The company operates 20,388 U.S. locations and opened 196 new stores in the third quarter, along with 651 remodels under its Project Elevate program and 524 stores under Project Renovate [4][8] Customer Behavior - Increased customer foot traffic has been noted, with Dollar General gaining market share from higher-priced retailers, although the average basket size remained flat as customers shop more frequently but spend less per visit [6] - The company experienced significant same-store sales growth for its value-priced items, particularly its Value Valley offering, which saw a 7.6% increase in same-store sales [7]