Dollar General Posts a Record First Quarter

Staff -- Home Textiles Today, 6/8/2009 12:00:00 AM

Goodlettsville, Tenn. —

"Robust" sales across the store and lower costs helped send Dollar General's profits skyrocketing during the first quarter to $83.0 million from $5.9 million in last year's 1Q.

"While consumables again set the pace, we are pleased to report strong sales in seasonal, home and our apparel categories," chairman and ceo said Rick Dreiling told analysts during last week's conference call.

Sales jumped 15.7%, to approximately $2.8 million, with comps up 13.3 on top of 5.4% increase in last year's quarter. Traffic and ticket were both up as Dollar General's core customers shopped more often and the chain attracted new customers, executives said.

Although the retail environment remains challenging, "our momentum continued to accelerate during the first quarter," said Dreiling.

Dollar General also improved average markup thanks to lower product costs, improved efficiencies in its distribution centers and curbed shrink.

While its sees the competitive environment as intensely promotional, Dollar General is sticking with its Every Day Low Price strategy and is working to improve its EDLP marketing message, he said. "People are scrambling for retail sales out there," he said.

The company sees building out private label as an important strategy as well as expansion of its off-shore sourcing network, which is already underway. "We'll start to see some of that start to play out toward the end of the year," said Dreiling. "We've put the team in place."

A fresh take on in-store décor just started rolling out and has hit five stores so far. The format is designed to make the store better organized and easier to shop. All remodels, relocations and new stores this year are getting the makeover, which will be in 250–300 units by the end of the year.

After spending last year focused on reworking the product mix in consumables, Dollar General this year is overhauling assortments in non-consumables. At this point, "we're 10 yards from our own endzone with 90 yards to go." The changes will start to become apparent late in the year, he said. "2010 is when we think we're going to be more trend-relevant and more opportunistic in what we can do on the nonconsumable side."

Dollar General