Dollar Tree Profits Up As Americans Seek Discounts

Dollar stores are thriving in this weak recovery as struggling Americans look for deals on the basics.

Dollar Tree, the nation's third largest dollar chain with 4,351 stores, saw its profits rise 15.6 percent to $187.9 million in the last three months of 2011.

"What's driving traffic?" CEO Bob Sasser asked on the company's earnings call with analysts Wednesday. "...New customers finding us all the time, it's still pretty tough out there, unemployment is high, we sell things people need everyday."

Like competitors Dollar General and Family Dollar, Dollar Tree has taken advantage of a bleak economy to expand. The company opened 278 new stores in 2011 and has plans for 315 more in 2012.

Dollar stores, descendants of variety and five-and-dime stores like Woolworth, have become the favorite destinations of Americans looking for cheap food and household products. In turn, dollar stores are expanding their food selections. Dollar Tree, for one, installed freezers and coolers in 376 new stores in 2011, executives reported on Wednesday's call.

Dollar stores have become such popular grocery destinations that some experts are now worried about the health impact of their cheap, processed food. In poor neighborhoods with few traditional grocery stores, some residents have come to depend on dollar stores for staples.

"I think our customer obviously is looking for those goods, those basic everyday consumables " said Kevin Wampler, Dollar Tree's CFO on Wednesday's call. "And we’re providing that."

Comments

[loki]

05:06 PM on 02/23/2012

bet supervalue is kicking itself in the butt for selling it off a few years back...

[rosiebag]

01:50 PM on 02/23/2012

Whos desperate?The recovery is in full blast, haven't you been watching MSDNC.

[slickbottom]

02:38 PM on 02/23/2012

I agee and I do watch MSNBC. Things are really starting to look up in my area of the country. That's good news for President Obama.

[OldTulsan]

06:23 PM on 02/23/2012

http://www.huffingtonpost.com/robert-reich/romney-middle-class_b_1257859.html
Robert Reich: The Downward Mobility of the American Middle Class, and Why Mitt Romney Doesn't Know

"January's increase in hiring is good news, but it masks a bigger and more disturbing story -- the continuing downward mobility of the American middle class.

Most of the new jobs being created are in the lower-wage sectors of the economy -- hospital orderlies and nursing aides, secretaries and temporary workers, retail and restaurant. Meanwhile, millions of Americans remain working only because they've agreed to cuts in wages and benefits. Others are settling for jobs that pay less than the jobs they've lost. Entry-level manufacturing jobs are paying half what entry-level manufacturing jobs paid six years ago.

Other people are falling out of the middle class because they've lost their jobs, and many have also lost their homes. Almost one in three families with a mortgage is now underwater, holding their breath against imminent foreclosure..."

[Six Mill]

08:59 AM on 02/24/2012

Most of these so called former middle class people only pretended they were middle class -- they were poseurs. their middle class existence was built on unsustainable debt and even used their house as an atm. everything borrowed against, everything with a note on it. So when their what turned out to be a tenuous job went buh bye they are now left with memories and what coulda been. true middle class starts at 200K a year income.

[frank day]

12:56 PM on 02/23/2012

A large new Family Dollar has taken over the anchor spot at a local strip mall.

It's in the spot formerly occupied by Old Navy.

[lofttypeofaview]

01:29 PM on 02/23/2012

And even though Old Navy and Gap are basically one company, Old Navy is the discount version of Gap.

[frank day]

01:46 PM on 02/23/2012

I didn't realize that. Really interesting.