Dollar General Corp.

The stable outlook reflects our expectation for solid revenue and earnings growth as the company's leading market share increases within the dollar store segment and it executes margin expansion initiatives. We believe Dollar General will generate solid free operating cash flow (FOCF) and maintain adjusted leverage at about 3x. We could lower our rating if: The company employs a more aggressive financial policy that adds debt and results in adjusted leverage breaching the mid-3x area; or Operating performance deteriorates, possibly because of intensifying competition or execution issues, pressures profitability, and raises adjusted leverage over the mid-3x area on a sustained basis. We could raise our rating if: Solid performance trends remain and the company's market share continues to increase while

...Dollar General Corp.'s performance has been resilient despite the COVID-19 pandemic and a weaker macroeconomic environment. As an essential retailer, Dollar General's 17,000-plus stores remained open through the pandemic. An increase in average ticket size on trip consolidation partially offset decreased customer traffic. This led to comparable store sales growth of 16.3% in fiscal 2020 (ended in January 2021). Notably, unlike many competitors, the company's margins expanded materially during the year as it benefited from higher sales of food and necessities, lower promotions, and cost efficiencies. In particular, Dollar General gained market share from drug stores, grocery stores, and specialty retailers. We believe the company will retain the bulk of its new customers with key initiatives, in particular new and expanded products in key nonconsumable categories. However, we believe positive consumer behavior trends during the pandemic will taper in the next fiscal year as more retailers...

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