DG - Dollar General: Business Model Struggling In Modern America

2024-02-24 07:42:25 ET

Summary

• Dollar General's business model is no longer sustainable as it charges a premium compared to larger stores and faces competition from Amazon and Chinese retailer Temu.
• The company's focus on lower-income areas and smaller stores leads to higher theft and labor issues, impacting profitability.
• Dollar General's prospects are uncertain, with the possibility of pivoting towards a traditional grocery brand or facing increased competitive pressure.
• I expect its valuation to decline towards the 10-12.5X range as it is revalued according to its high social and economic risks.

Last July, I covered Dollar General ( DG ) with a bearish outlook in " Dollar General : Not A Defensive Stock In The Modern World." It lost ~30% of its value from that time through its October trough. Since then, it has had a decent rebound but remains around 15% lower than when I covered it....

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