Profitability Trends in Discount Retail: Dollar Tree vs. Dollar General

Afya Prince

Co-Presenters: Individual Presentation

College: College of Business and Public Management

Major: BS.MANAGEMNT-GENBUS

Faculty Research Mentor: Huaibing Yu

Abstract:

This study examines and compares the profitability performance of Dollar Tree, Inc. and Dollar General Corporation over a five-year period. Both firms operate within the U.S. discount retail sector and serve similar low- and middle-income consumer segments, yet they employ different pricing strategies, cost structures, and growth models. These differences provide a useful opportunity to evaluate how strategic and operational decisions influence long-term profitability.

The primary research question guiding this study is: How do Dollar Tree and Dollar General differ in profitability performance over the past five years, and what financial factors help explain these differences? To address this question, the analysis uses publicly available financial data from company annual reports and financial databases. Key profitability measures include operating margin, net profit margin, return on assets (ROA), and return on equity (ROE). The study also examines trends in these ratios over time to capture changes in profitability during periods of economic disruption and inflation.

The methodology involves ratio analysis and comparative trend analysis using five years of annual financial data. Results are presented through tables and line charts to highlight differences in profitability levels, consistency, and volatility between the two companies. The findings are expected to show that Dollar General demonstrates stronger and more stable profitability, while Dollar Tree experiences greater margin pressure due to pricing constraints and cost challenges.

This research contributes to a practical understanding of how business models within the same industry can lead to divergent financial outcomes. The results offer insights relevant to investors, managers, and analysts evaluating performance in the discount retail industry.