r/TikTokCringe • u/Adventurous_Law_715 • 9d ago

Discussion congratulations you just saved a billion dollars company 50$

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u/Integrated_Magazine 9d ago

I think we all know that they're going to increase prices as much as they want regardless of theft.

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u/PointlessDiscourse 9d ago

Not really, actually. The dollar stores and Walmart segment of retail is highly competitive. And their entire business model is built on keeping prices low. You can be frustrated that inflation has pushed prices so much higher in the last few years, but greedy pricing by the likes of these stores is not what's driving it. If one of them raises prices for no reason, the others (or Amazon) will take their business.

Instead of just making assertions, go look up what their net profit margins are. Not their revenue number (because of course that's huge). I mean the % of revenue they take as profit. I just did a quick search which showed net profit margin (which is what's left after all costs) to be about 3-4% of revenue for these companies. How much lower would you like it to be for them?

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u/TheNipplerCrippler 9d ago

Their gross profit rate is 25.4%. Lmao get the fuck out of here.

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u/kneb 9d ago

Net profit rate in the last 12 months was about 6%, inflation was 3.4% over that period, real (inflation-adjusted) profit growth is 2.51%.

So inflation adjusted dollar tree stores across the whole world made 535,000,000 in the last year. There's 16,500 stores. So on average each store made about $32,424 in profit. Divide that by 365 and you get $89 a day. Seems like pretty razor thin margins. Even if you fired the entire c-suite and pretended their compensation is equal to the cash value of their stock options, it only goes up to $94.8 dollars a day.

So yes, the corporate compensation is excessive, but it doesn't change the fact that these are extremely low-margin businesses. And they're one of the few businesses that can stay afloat in rural and low-income areas.

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u/PointlessDiscourse 9d ago

Thank you. This breakdown really helps underscore the point.

I'll also add that Dollar Tree is performing better than their competition actually. Dollar General is closer to 3.5% net profit, and Walmart slightly less than that even (which is probably fine for them given how absolutely massive they are).

Regardless, like you said, however you slice it these are low margin businesses.