Dollar General (DG) Shares Plunge 1.79% as Store Closures and Operational Struggles Weigh

Dollar General (DG) shares fell to their lowest level since May 2025, with an intraday decline of 2.84% on October 7, marking a 1.79% drop for the day and a 4.96% decline over three consecutive sessions. The stock’s weakness reflects broader challenges facing the discount retailer as it navigates shifting consumer behavior, macroeconomic pressures, and operational adjustments.

Customer spending patterns are increasingly favoring “basic essentials” amid persistent inflation, a trend highlighted by CEO Todd Vasos. While Dollar General’s average transaction value rose by 2.3% in the 2024 holiday season, store traffic fell 1% year-over-year, signaling reduced purchasing frequency. This dynamic, driven by strained household budgets, poses a risk to the company’s volume-dependent business model, particularly as discretionary spending remains subdued.

Strategic store closures are amplifying near-term pressures. The company announced the shuttering of 96 underperforming locations and 45 PopShelf units, costing $232 million in impairments. These closures, concentrated in urban areas with high operational costs, aim to streamline the store network and prioritize profitable markets. Additionally, Dollar General plans to relocate 45 stores in 2025 to boost sales growth by 3.5% to 4.4%, underscoring a shift toward data-driven site optimization.

Operational initiatives are central to mitigating these challenges. A “Back to Basics” strategy emphasizes loss prevention, enhanced checkout staffing, and supply chain efficiency to strengthen profit margins. The company is also expanding delivery services, aiming to offer same-day delivery to 10,000 stores by year-end, a move designed to capture underserved rural markets and differentiate from competitors. These efforts align with broader industry trends, where retailers like Ross Stores and Kohl’s also grapple with inventory overhangs and declining consumer confidence.

While Dollar General’s 2024 fourth-quarter operating profit fell 49.2% due to store closures and inflation, the company remains focused on cost discipline and new store growth. Plans to open 575 U.S. and 15 Mexican locations in 2025, alongside 4,250 store remodels, signal a long-term commitment to expanding its footprint. However, with macroeconomic conditions unlikely to improve for its core customer base, the stock’s trajectory will depend on the effectiveness of its strategic adjustments and its ability to maintain affordability as a key differentiator in a competitive retail landscape.