No. of Recommendations: 10
An update on some further Pacer.ai foot traffic data, see (further retail comparisons available):
https://x.com/kouroshshafi/status/1744461105525850...
DG FDO DLTR (chain, i.e., not including FDO)
July 23(Q2) -4% 1% 5%
Aug 23 (Q3) -5% -3% 3%
Sep 23 (Q3) -2% -5% 1%
Oct 23 (Q3) -7% -9% -2%
Nov 23 (Q4) -3% -7% 3%
Dec 23 (Q4) -2% -9% 5%
These are year-over-year comparisons, so the historical benchmarks are relevant.
Subsequent to two quarters of traffic increases, 4Q of 2022 DG saw a "a modest decrease in customer traffic" (press release), which then turned into a "decrease in foot traffic" in Q1, 2023 (no longer modest?) (press release). In Q2, 2023, SSS turned negative (-0.1%), "driven by a decline in customer traffic". In short, 3 consecutive quarters of traffic decreases, with the decreases apparently intensifying in Q1.
In Q3, 2023, DG reported an increase of customer traffic thus: "Same-store sales decreased 1.3% compared to the third quarter of 2022, driven by a decline in average transaction amount, partially offset by an increase in customer traffic."
In the Q3 2023 call, Vasos described the traffic patterns thus:
From an overall monthly cadence perspective, same-store sales growth was very similar in all three months of the quarter. However, I'm pleased to note that customer traffic was positive in Q3. After starting the quarter slightly negative, traffic turned positive in the middle period and improved sequentially each period of the quarter. Notably, customer traffic and same-store sales continue to improve in November, which, although early in the quarter, we believe reflects early traction from our work on getting back to the basics here at Dollar General. While you'd obviously like to see positive traffic trends year over year, -3% and -2% off of Nov and Dec 2022 (4Q), respectively, i.e., before the wheels started to come off, strikes me as relatively encouraging, particularly when compared to FDO's trajectory. Taken as a whole, the data seems consistent with the notion that the biggest headwind for DG right now is the struggling, low-income rural consumer, and that DG is still capable of out-performing its most direct competitor (FDO).
