By Himanshu Poddar - September 11, 2012 | Tickers: DG, DLTR, FDO, WMT | 0 Comments

Himanshu is a member of The Motley Fool Blog Network -- entries represent the personal opinions of our bloggers and are not formally edited.

Amidst the problems of an uncertain economy with rising unemployment, sovereign debt crisis, cost inflation, and shrinking budgets of consumers; all companies are facing difficulties in attracting customers and lure them to their stores. Companies do not have any option but to increase their promotional spending or offer discounts to instigate sales, hurting margins in the process. Hence, they are in a deadlock.

However, there are companies who benefit from such circumstances and always manage to rise above the others. As discussed in my recent article, the discount retailers tend to benefit from such consumer sentiments and if you own any of those jewels, they will make your portfolio shine. One of them is Dollar General (NYSE: DG), which has again posted a quarter that beat market expectations and delighted investors. If you would have owned the stock at the beginning of the year, you would have earned an amazing 25% on your investment in this choppy market.

The Retailer Did It Again

After four consecutive quarters of remarkable revenue increases, the retailer did it again with a increase of 10.4%, clocking $3.95 billion. Adjusted earnings jumped 33% to 69 cents a share as compared to prior years quarter. The results were driven by increased customer traffic in its stores and higher purchases in each visit of the customers. All thanks to the retailers strategy of offering everyday low prices which includes most items for $10. This enables the customers to shop more while spending each penny judiciously.

A point which works in favor of the discount retailer and also makes it different from its peers is the fact that it along with offering low prices its stores are smaller, making it easier for customers to navigate. Also, since the stores do not require much space such as stores of Wal-Mart (NYSE: WMT) do, it can be opened closer to the customers making it more accessible to them.

This also enables Dollar General to have lower costs attached to the smaller format stores as against retailers such as Wal-Mart which are suffering under the pressure of huge costs related to its conventional large stores. Even Wal-Mart is now intending to switch to smaller stores which can be opened in customers neighborhood so that shoppers can easily drop in for their daily requirements.

Dollar General witnessed an amazing quarter in terms of its segmental performance. All four segments witnessed stellar growth over last year with the highest growth of 12% coming in for its largest Consumables segment. The segment makes 75% of the retailers revenue and was largely driven by its expansion efforts in the snacks and perishable foods category.

New Store Spree

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An Opportunity Not To Be Missed – This Company Is Right On Track!