A second, larger correction (don't post a couple beers in while watching football! a lesson learned): the figures for density above, which I was drawing from the article I linked, are actually for both DGs and DLTRs/FDOs in any given state.

For instance, according to the article, Miss. has 3 DGs and DLTRs/FDOs per 10, 000 residents.

That said, the correction doesn't change my basic reservation with the author's approach and conclusions.

The FY2022 DG report says Mississippi has 617 Dollar Generals (and two pOpshelfs). The 2022 census update has its population at 2.94 million. So there is one Dollar General for every 4, 764 Mississippi resident. By contrast, a state like Oregon has about 1 Dollar General per 50, 000 residents (84 Dollar Generals in a state of 4.24 million).

While that's closer to the author's claim that DG needs 6 000 residents for a Dollar General to run profitably, I'm still very skeptical of the claim, as it doesn't match the larger evidence. To return to the Mississippi example: while it is a very rural state, about 1.3 million+ live in a metropolitan area (the Jackson area being the largest). Given DG's general claim that 80% of its stores are in population areas with 20k or fewer residents, there is likely about one DG per ~3500 residents outside of the metropolitan areas, if the 80% figure approximates the metro versus non-metro distinction.

This squares with evidence I've seen of towns in the 3500 - 6000k range having multiple Dollar Generals, and with tiny towns in the larger environs still having their own Dollar General if they have a population in the 1, 000 range. A scroll of Dollar Generals in the rural South, on Google Maps, will quickly illustrate the point (for instance, I just looked around New Hope, Alabama, which offers a good example).

The author's overarching premise appears to be that this kind of saturation is hitting DG's profitability, and helps explain the reset in price expectations going forward. But what that narrative fails to explain is why there was a significant and sudden drop in profitability and operating margins in the last two quarters, given that this kind of saturation has existed in the DG's primary markets for a number of years. To my eye, the much more likely explanation for the quick drop in operating margins and profitability is some combination of macro (e.g., labour costs, distressed consumers) and DG-specific (execution) problems, with the exact combination thereof being a matter of interpretation.