A little over a month ago, we asked a question that likely got plenty of investors' notice: is Dollar General (NYSE:DG) or Dollar Tree (NASDAQ:DLTR) the better discount retail stock? While our analysis at the time went quite in-depth, we have a new data point to consider in the mix: holiday shopping. Dollar Tree recently announced it was planning to add a whole slew of new jobs to its operations ahead of holiday shopping season, though perhaps not in the fashion you may expect.
Dollar Tree Focuses on Online Shopping
Dollar Tree, in a bid to accommodate what it likely believes will be a hefty batch of holiday shoppers, is bringing in an extra 25,000 seasonal workers to help absorb the impact. Reports suggest that many of those jobs won't be going to Dollar Tree store locations, but rather to distribution centers, as the company expects more people will turn to online shopping as the various lockdowns continue to bite and concerns over coronavirus remain.
However, there will be plenty of hiring at stores; reports suggest that the workers will be spread across over 15,000 physical locations. So assuming that each of them gets just one new hire, that's better than half the planned jobs going to physical stores.
Additionally, the distribution center jobs will be going to 26 distribution centers, which does mean a healthy number of people per center. If we continue to assume the one-per-location ratio, that means each distribution center will land around 385 people. The actual numbers likely won't be that clean, of course—it's a safe bet some will get more than others—but even as Dollar Tree ramps up its online presence, there will still be plenty of room in the physical field.
Merry Christmas, Maybe?
The biggest issue right now is, of course, the coronavirus, which threatens to keep even more people home as holiday shopping season looks to actually fire up. While on a certain level, this has already been prepared for—stores are set to space out their discounts and bargains over the space of a few months rather than try to get a whole bunch of people in stores on Black Friday 2020—there's really no preparing for just how many people will actually show up.
Some, spurred on by the recent example of President Trump seemingly beating coronavirus with a three-day weekend at Walter Reed hospital, will pluck up their courage and take to the stores as they may not have done in months. Others, meanwhile, will continue to be concerned about the state of the disease and instead focus on online shopping. It's important to note that, coronavirus or no, a lot of people were swinging toward online shopping anyway, having grown tired of throwing elbows and reading about Black Friday trampling events.
Word out of Deloitte expects the move to online to continue in earnest, with e-commerce sales poised to increase up to 35% this year, pushing for a cumulative total between $182 and $196 billion for the holiday shopping season. Not surprisingly, that's prompting retailers all over to push more resources into the online shopping experience; Walmart (NYSE:WMT) is looking to add over 20,000 new seasonal hires at its fulfillment centers to help get products ordered online where they need to go, and Amazon (NASDAQ:AMZN) is poised to tack on an additional 100,000 workers above and beyond what it's already brought in.
Spreading Out All Over
Dollar Tree makes an excellent case for itself, as our latest research discovers. Not only does it have an advantage in its physical presence—Dollar Tree has a presence in its eponymous stores, but also in Family Dollar stores, which it also owns—but it has a surprisingly robust online presence. The site's blog offers DIY inspirations for three separate holidays at once: Halloween, Thanksgiving, and Christmas.
Analysts are in favor of this one, too: the company currently averages a “buy” rating with eight “hold” and 15 “buy” ratings, and a consensus price target of $105.33, well above yesterday's close at $89.98.
While our earlier reports gave the nod to Dollar General as the current leader in the discount retail space, there's certainly something to be said for Dollar Tree. With analysts nearly two-to-one in favor of “buy”, a significant upside between current price and consensus target, and plans to ramp up hiring to better serve customers in the next few months going forward, Dollar Tree makes a good case for itself too. As the old Avis car rental commercials used to say, number two tries harder.
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