Dollar General Exceeds Expectations in 3Q
By Cecile B. Corral -- Home Textiles Today, 12/14/2009 12:00:00 AM
Goodlettsville, Tenn. —
Dollar General Corp.'s home department is among the non-consumable departments being enhanced in 2010 with a new line under a new propriety brand.
The True Living line of home products is set to roll out to all of Dollar General's units by April 2010, the company noted during its third-quarter earnings call last week.
"In non-consumables, we are developing an arsenal of brands across multiple product categories," said Rick Dreiling, chairman and ceo. Aside from home's True Living, these also will include "Holiday Style" and "Perfect Harvest" in seasonal, a rebranded "Bobby Brooks" in apparel for women and girls, and "Open Trails" for men and boys.
"Our strong seasonal sales in the third quarter reflect our emphasis on becoming more trend-relevant in our non-consumable categories," he continued. "Back to school, Halloween and harvest merchandise were well received by our customers, with strong sales increases over last year and sell-throughs exceeding our expectations."
For the third quarter, ended Oct. 30, net income was $75.6 million, or 24 cents per share, compared to a net loss of $7.3 million, or 2 cents per share, last year. This represents a 151% increase from the 2008 third quarter when net income was $30.1 million, or 9 cents per share, excluding the impact of a $34.5 million ($37.4 million after tax) shareholder litigation settlement and related expenses.
Sales rose 12.7% to $2.93 billion and comps jumped 9.2% thanks to improved customer traffic and average transaction .
"This was another great quarter in what has so far been another very strong year for Dollar General," Dreiling said. "Our same-store sales growth of 9.2% in the third quarter reflects the positive customer response to the changes we are making in our store experience and merchandise category management. Overall, we believe that we are on track to deliver excellent results for the full year as we continue to provide our customers quality products and great value in a convenient neighborhood store."
Year to date, net income was $252.2 million, or 79 cents per share, compared to net income of $26.3 million, or 8 cents per share in the year-ago period. Excluding the aforementioned charge, profit climbed 296% from the 2008 39-week period net income of $63.7 million, or 20 cents per share.
Sales increased 13.1% to $8.61 billion, with comps up 10.3%.
Merchandise inventories as of Oct. 30 were up about 4% in total and down 1% on an average per-store basis. Annual inventory turns increased to 5.2 times from 5.0 times in the year ago period.
Dollar General was "pleased" with its sales over the four-day Thanksgiving weekend and quarter to date, giving it reason to be "cautiously optimistic" regarding the results for the remainder of the 2009 fiscal year.
"Customer response to our Thanksgiving and Black Friday ad was very favorable," Dreiling said. "We've added some great gift items for the holidays. We carry over 400 toys in our stores at great price points, and we think our holiday gift wrap, lights and décor are better than ever and offer a great value to our customers."
The economic environment "continues to be very challenging for the average consumer," he continued, "and consumers are concerned about job security."
The company currently expects to pay down debt of approximately $300 million in January 2010, with a portion of its expected excess cash. Dollar General expects to end the 2009 fiscal year with about 500 new stores and a combined 450 remodels and relocations. It anticipates total capital expenditures for the 2009 fiscal year in a range of $275 million to $300 million.
In 2010, Dollar General plans to open about 600 new stores and remodel or relocate 500 units.
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