GOODLETTSVILLE, Tenn. — In its first quarterly earnings report since returning to life as a publicly traded company, Dollar General here last week said sales rose 12.7% to nearly $3 billion and same-store sales grew by 9.2%, driving the chain back into the black for the quarter.
Consumables and seasonal goods led the charge, with a 15% sales increase in the 13-week period, which ended Oct. 30 and was the company's fiscal third quarter.
“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,” said Rick Dreiling, chairman and chief executive officer, in a conference call with analysts.
He also said the company was encouraged by the start of the Thanksgiving and Christmas holidays.
“We are pleased with the start of the holiday selling season and our sales to-date in the fourth quarter,” he said. “Customer response to our Thanksgiving and Black Friday ad was very favorable.”
For the 39-week 2009 period, the company reported net income of $252.2 million, compared with $26.3 million in the year-ago period. Year-to-date sales were $8.6 billion, up 13.1%.
The chain, which operates more than 8,700 stores in 35 states, is undertaking several key initiatives going forward to continue to drive sales growth, including store remodels that include taller gondolas and increased private-label offerings.
Last year the chain raised the profile of its food gondolas to 78 inches, which allowed it to expand its offerings in both national brands and private labels. This year that effort has been expanded to the candy, snack, party and stationary offerings.
“These changes contributed significantly due to strong performance of our consumables and seasonal categories in the third quarter,” Dreiling said.
The company is also implementing more comprehensive category management initiatives, including new planograms in HBC. The new planograms, which the company also said contributed to sales growth in the third quarter, include new private-label vitamins and expanded cosmetics offerings.
In consumables overall, Dollar General now carries nearly 1,300 private-brand items, accounting for 21% of consumables sales.
In addition, the company is rolling out a new “customer-centric” store design that it said better communicates its value message.
“We are completely rebranding our new stores to the use of signage and visuals that explain our value proposition to the customer at the point of sale,” Dreiling said. “The new store formats have new layouts and adjacencies that significantly improve the customer's ability to shop.”
All new stores, relocations and remodels will utilize the new customer-centric format. By the end of fiscal 2010, Dreiling said the company anticipates about 1,500 stores will feature the new format.
“We believe that Dollar General is well positioned to meet the challenges presented by the economic environment, and we remain optimistic about the remainder of the 2009 fiscal year,” he said. “Going forward, we believe we have significant runway for continued growth in sales, continued growth in margins, as we implement our operating priorities.”
The chain, which was taken private by Kohlberg Kravis Roberts in 2007 for about $7.2 billion, was relaunched as an initial public offering last month at $21 a share.
