[Atlas]

Two Dollar General stores separated by a mile popped up in my hometown in northern California, a place that can barely support two of any stores even grocery stores. Dollar General stores are expensive and nearly always empty. When I lived in the south eight years ago, Dollar General stores were expensive and empty too. I would not be surprised at some point if the economics of their expansion didn't make sense.

As someone else mentioned, Dollar Tree is different. There is a Dollar Tree that is always packed next to an empty Dollar General in my hometown. Dollar Tree is a deep discount store. Dollar General is a convenience store without gas.

[Spooky23]

Dollar General is like Krispy Kreme was year ago. They are in hyper growth building stores everywhere. Stores like what you describe get lost in the growth.

If the company is successful, it will know that and it will purge the lousy stores. Otherwise, they’ll implode when the interest rates go up and they can’t borrow money anymore.

[adventured]

Interest rates are the last thing Dollar General needs to worry about at this point.

$1.2 billion in profit on $22 billion in sales. They have $2.6 billion in long-term debt, paying ~$100m in annual interest on their total debt.

They could afford a 15% interest rate on their debt.

With their income, they have no need to borrow to build out stores. Their dividend is modest, so that's also no concern vs their need to spend to build.

[Spooky23]

Dollar General is a refinement of Ray Kroc’s McDonalds model for passive investors. Their magic is net leasing in shitty areas with barebones stores, so they don’t hold many obligations on their balance sheet, and don’t spend a lot on building upkeep and taxes. It is basically a ground lease and a bond alternative.

That works because it’s an investment that lets passive investors yield 5-7%, which is a good yield from a company with a good credit rating.

As rates rise, it gets less and less attractive, especially as leases start maturing, growth slows, and you need to put capital dollars into cheap buildings that you don’t own. It’s not a bad company, but it’s no Walmart.

[jrs235]

Earlier this year on vacation in Florida I recalled seeing a Dollar General right behind a Dollar Tree in Haines City. The Dollar General is closed and property for sale. The Dollar Tree was open. Both are across the street from Walmart.

https://www.google.com/maps/@28.1248173,-81.6377691,3a,87.1y...

To see Walmart turn 180 degrees.

[heartbreak]

Dollar General is a real estate holding company.

[Atlas]

If it could only be as successful as McDonald's in that pursuit.

[rconti]

There are 2 just a couple of miles apart in Pine Grove, CA, too. Very small foothills community. Odd.