AP

EVEN before the economy tanked, discount stores, or dollar stores as Americans call them, were looking healthy. Now their profits are rising like helium-filled balloons. Dollar Tree, a Virginia-based chain of dollar stores, had sales of more than $1.39 billion in the fourth quarter of last year, a 6.8 % increase over the year before. For the whole of 2008, Dollar Tree, which has been in business since 1953, notched up record sales of $4.64 billion.

Family Dollar is prospering, too. The market value of this company, based in North Carolina and with more than 6,600 stores in 44 states, rose 36% last year. Other dollar-store companies have also reported big profits.

Dollar stores sell everything from sweets and toys to linens and household cleaning products. Contrary to popular belief, not every item in the stores costs a dollar. But all the items, most of which are generic, are still cheaper than they would be in grocery or drug stores. Companies achieve this by buying in bulk, by keeping costs low and by avoiding expensive national advertising, especially on radio and television, and instead send out circulars every month to local customers.

But dollar stores are changing, in line with shifts in the economy as a whole. For decades they were to be found only in rural areas, but now—with recession gripping all parts of the country—they are just as common in Chicago or Los Angeles. Once, too, they were a particular feature of southern states. But now 99¢ Only Stores, a company that is based in aptly named Commerce, California, has stores in Arizona, California, Nevada and Texas. In fiscal 2008, total sales were more than $1.2 billion.

Clearly, as the recession persists, dollar stores will continue to thrive. “Thrift is in. Saving money is in,” boasts Josh Braverman, a spokesman for Family Dollar. “And it still will be even after the economy recovers.”