American discount stores growing amid rising inventory questions

Dollar General and Dollar tree have returned to an accelerating growth trajectory during the last 12 months. Tractor Supply, on the other hand, has maintained robust growth throughout the last years.

Despite challenges with increasing inventory both Dollar General and Dollar Tree have also been able to increase margins from 2021. In fact, Dollar Tree has increased its margins to the highest levels since 2018.

As with so many non-food retailers, all three discount stores have seen inventories rise more rapidly than revenues.

The inventories for Tractor Supply have risen by more than 20% for the last four quarters, whereas sales have been increasing only about 8%. Dollar tree and Dollar general have seen similarly significant increases in inventories.

Four Dollar General half of the rapid growth comes from the rapid expansion of new stores. The like-for-like growth for the company was 6,8% for Q3/2022. Since Q3/2021, the company has opened 688 net new stores. That represents a 5,8% growth in total square footage. The company announced that it plans to open more than 1 000 new stores during 2023.