During good times, poorly run companies sometimes get by. You don't have to execute perfectly when stores are crowded, people are flush with cash, and many people aren't being all that careful with their purchases.
A crisis, however, whether it be a typical recession or the coronavirus pandemic we're living through now, can show investors which companies have stronger foundations for success. Of course, some businesses simply can't operate right now.
But when it comes to restaurants, chains that sell essential items, and other businesses that can still legally operate, the current situation has clearly shown that some companies have the strong management and long-range planning that makes them good options for investment.
Dollar General (NYSE:DG) has over 16,000 stores and has delivered 30 straight years of same-store sales growth. Many of the chain's locations serve markets that are under-served by traditional grocery chains.
Essentially, Dollar General serves communities, and its mix of food and household essentials has become even more crucial during the coronavirus lockdown. The retailer has not reported sales numbers, but it has acknowledged that it has hired 50,000 extra workers to handle increased demand between its stores and its distribution centers.
Domino's (NYSE:DPZ) does not offer the best pizza. Instead, the company has made its business model about execution. You may not love the food, but it's really convenient to order it and it's not very expensive.
That's a model for winning during a time when restaurant dining rooms are closed. Domino's has always been a full take-out and delivery model. It hasn't had to make any operational changes aside from taking steps to keep employees and customers safe.
"All but a handful of our U.S. stores have remained open and are serving customers," CEO Ritch Allison said in a press release. "All U.S. supply chain centers are also open and fully operational."
The company admits that sales may be affected by the coronavirus pandemic in a negative way. But the effects should be much smaller than the big drops most still-operating restaurant chains will post (and gains would not be shocking, as Domino's has hired 10,000 additional workers to help with demand).
Best Buy (NYSE:BBY) has been incredibly well run since former CEO, now Executive Chairman, Hubert Joly took charge. The one-time hospitality executive instituted a radical turnaround plan, Renew Blue, that "delivered improved customer satisfaction, market share gains, comparable sales growth, and improved margins while achieving $1.4 billion in cost reductions and efficiencies to fund investments in Best Buy's organic growth," according to a press release.
Basically, Joly took a company that looked to be a clear victim of the so-called retail apocalypse and reversed its fortunes. That has left new CEO Corie Barry in a strong position to further strengthen the chain by evolving its growing services and healthcare divisions.
During the current coronavirus pandemic, Best Buy has had to close its stores but has experienced a sales spike as people look to enhance their home offices, and buy appliances and entertainment gear. Through digital sales, curbside pickup, and delivery, the company has remained strong, and that's a testament to the connection it has made with its customers.
Survival of the fittest
These three chains were all doing well before coronavirus. They have had to adapt their business model (some more than others) and supply chains in a very challenging time. The fact that they have done that so well shows how strong their management is and highlights the depth of their operational expertise.