Benzinga’s weekly Stock Wars matches up two leaders in a major industry sector, with the goal of determining which company is the better investment.
This week, the duel is between a pair of discount retail chains: Dollar General Corp (NYSE: NYSE:DG) and Dollar Tree, Inc. (NASDAQ: NASDAQ:DLTR).
The Case For Dollar General: This company began in October 1939 in Scottsville, Kentucky, as J.L Turner and Son. The elder Turner was a former dry goods salesman who began buying and liquidating bankrupt general stores during the Great Depression. Turner was no stranger to having a store go bust — he twice failed at owning and operating an independent store before launching this venture.
The “dollar” aspect to the operations was introduced in 1955 by Cal Turner, the son in J.L. Turner and Son, who decided to make the “dollar days” promotions used in department stores a permanent feature of this operation. The company became Dollar General in 1968, the same year it was listed on the NYSE.
Today, the Goodlettsville, Tennessee-headquartered Dollar General operates 17,426 stores and 27 distribution centers spread across 46 states.
Among the company’s recent corporate developments are a new focus on providing healthcare-related products and the appointment of Dr. Albert Wu in the new position of vice president and chief medical officer; a 50,000-person hiring goal that was announced on July 14 with a Labor Day deadline; and the rollout of a new retail subsidiary called pOpshelf where approximately 95% of merchandise is priced at $5 or less.
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The Case For Dollar Tree: Dollar Tree can trace its roots back to K.R. Perry, who opened a Ben Franklin variety store in Norfolk, Virginia, in 1955. In 1970, Perry and his son Doug Perry teamed with Macon Brock to open K&K Toys in Norfolk. This venture grew into more than 130 East Coast stores, located mostly within shopping malls.
By 1986, Doug Perry and Brock joined Ray Compton to launch the discount retailer, Only $1.00, with five stores in three states. K&K Toys was sold to KB Toys in 1991 and Only $1.00 became Dollar Tree Stores in 1993. The company was publicly listed two years later.
Today, the Chesapeake, Virginia-headquartered company operates 15,772 stores across the 48 continental states and five Canadian provinces under the Dollar Tree, Family Dollar and Dollar Tree Canada brands.
Among its most recent corporate developments are a new push to increase its workforce via hiring events at its 26 U.S. distribution centers and a new recruitment effort for store managers, assistant store managers and distribution center leadership; the launch of its Chesapeake Media Group subsidiary to increase its digital marketing resonance; and Family Dollar’s recent partnership with InstaCart for same-day delivery services from more than 6,000 stores along with the new e-commerce capabilities on its website.
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The Verdict: Both stocks have held up relatively well compared to the overall market. If we do head to a full-blown recession, dollar stores tend to do well.
The big difference between the two is Dollar Tree’s Wityniski was frank about identifying the supply chain and labor challenges facing his business, while Dollar General’s Vasos did not cite any potential hiccup in current and near-future operations.
The best advice for both long-haul investors and overeager traders might be to wait for the earnings reports to get a better handle on how the companies are coping with rising inflation. Most likely, they will come through with vigor.
But, then again, to quote the great Fats Waller: One never knows, do one?
Photos: Top photograph by kalhh / Pixabay; store photographs by Mike Mozart / Flickr Creative Commons.
This Article Was Originally Published August, 2021
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