Over the past 5 years, the Dollar Stores experienced a notable shift in both private label and consumables right when the consumer needed it which drove massive margin expansion. This happened alongside accelerated unit growth and a tailwind from food inflation. Now, private label and consumables penetration are hitting a ceiling and food prices are deflated relative to last year. With margins now at peak, we don’t need profitability to deteriorate but rather for these tailwinds to fade in order to build the short case.
