GOODLETTSVILLE, Tenn. — Although consumers are generally feeling better about a more stabilized economy, they are still cautious in their spending, Richard Dreiling, chairman and chief executive officer of Dollar General Corp. here, said last week.
“Our basket size is still growing, and we're still growing transactions,” he said. “We continue to see signs of this new consumerism, where people are shifting channels, trading down and changing their habits, and you're seeing it in the growth of our private brands.
“It used to be that when people ran Coke in the ad, consumers would buy four or five weeks' worth of Coke and put it in the closet. But that's not taking place any more. Consumers are buying enough Coke to meet their needs, but they're not stockpiling, which is indicative of the fact people are holding back.”
Dreiling said corporate research at the end of 2009 indicated Dollar General was attracting and retaining new customers, with the fastest-growing segment coming from consumers earning more than $70,000 a year.
The company is also growing share-of-wallet among existing customers by 13%, “which makes for a nice balance of the new and the old,” he said.
“And 97% of our new customers said if there is a change in the economic environment, they would continue to shop with us, which is the exact same number as our existing customers.”
Dreiling made his remarks during a conference call with analysts to discuss financial results for the fiscal year that ended Jan. 29.
Net income for the 13-week fourth quarter rose 6.5% to $87.2 million, while sales were up 11.9% to a record $3.2 billion, and same-store sales increased 7.4%. For the year, net income was up 219.6% to $339.4 million, while sales rose 12.8% to a record $11.8 billion, and same-store sales jumped 9.5%.
The company said its focused merchandising efforts resulted in a 15.3% sales increase in consumables for the year.
Gross margin for the year rose 201 basis points to 31.3%, due largely to the growth of private-brand products to approximately 1,300 SKUs — a penetration exceeding 21% of consumables. The company also gained traction by using category management, Dreiling noted.
He said Dollar General expects to open 600 new stores this year and to remodel or relocate 500 others, spread across its entire 35-state area, at a capital cost of $325 million to $350 million.
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*DOLLAR GENERAL INCURRED CHARGES TOTALING $85.7 MILLION AFTER TAXES DURING THE FOURTH QUARTER OF 2009 RELATING TO TERMINATION OF SPONSOR ADVISORY AGREEMENTS WITH KOHLBERG, KRAVIS, ROBERTS & CO. AND GOLDMAN SACHS & CO.; THE ACCELERATION OF CERTAIN EQUITY-BASED COMPENSATION; AND THE EARLY RETIREMENT OF LONG-TERM OBLIGATIONS.