Building on the progress made in the first half, Dollar Tree has posted a robust set of third-quarter numbers — although the uplifts come off the back of a modest performance during the prior year. Both the Dollar Tree and Family Dollar fascia delivered growth, with same-store sales up by 5.0% and 1.5%, respectively.
The acceleration of sales is encouraging, not least because it has been delivered against the backdrop of a much more competitive market where many retailers are focusing more on price as a means of driving custom. Moving into the final quarter, it does not look as if price competition will ease up; if anything, it will likely intensify.
Despite this, we are broadly optimistic about dollar store formats. We believe the one-dimensional pricing structure, which makes it difficult to overspend, is a key point of difference and helps to cement the perception of value for money. This is borne out by our customer data, which show that the value for money and price ratings for both Dollar Tree and Family Dollar strengthened slightly over the past six months.
Important though it is, low price is not the only factor that is helping to drive sales. Indeed, it is notable that many of the group’s core customers have seen their financial positions improve modestly over the course of this year,…