Cigarettes will soon be available at all of Dollar General’s 10,000 stores. It’s part of the retailer’s plan to offer more items like groceries, beer and wine.
“Where’s the cigarettes?”
Dollar General CEO Rick Dreiling says that’s the number one question he gets from customers and managers when he visits stores. The company has been test-marketing tobacco at a handful of locations. The Goodlettsville-based retailer says sales have been brisk, but profit margins on cigarettes are small. And the number of Americans using tobacco has been in decline for years. Dreiling conceded both points during a conference call with investors Tuesday.
“It’s a dying category. It’s a category that’s going to feel really good for about a year. So, we’re doing this based on what our store managers are telling us what our customers want.”
Another reason for Dollar General getting into the tobacco business could be its biggest competitor, Family Dollar, which started offering cigarettes last summer.
Dollar General’s stock fell by seven percent Tuesday, its lowest level since March.
Dollar General officials say sales jumped to nearly $4 billion in the last quarter. The company says most of the growth was driven by higher demand for candy and snacks.