GOODLETTSVILLE, Tenn. — Customers seeking value are finding more than that at Dollar General, officials at the retailer here said last week.
Work to improve store conditions and merchandising during 2008 — including more planogrammed sections giving the value discount chain a consistent look and feel — is helping drive double-digit gains in same-store sales, according to Richard Dreiling, chairman and chief executive officer of Dollar General, speaking in a conference call last week discussing results for the recently ended fiscal year.
“I think what is happening with our economy is giving us a lot of trials with a lot of people who haven't experienced Dollar General in a year or two, or might not have ever,” Dreiling said. “And they're coming in and seeing the improvements, and they are appreciative and responding to them.”
Merchandising changes at Dollar General over the past year include a greater variety of convenience foods and beverages, accommodated in part by shelving that's been raised from 66 inches to 78 inches, Dreiling said. Improved product and category adjacencies, as well as more planogrammed space in stores, are increasing sales productivity. Sales per square foot averaged $180 in 2008, up from $165 in 2007, he said.
“We continue to improve our store standards,” Dreiling said. “We have a long way to go, but we're working on delivering a consistent look and feel across the chain.”
Gross profits — which improved by 51 basis points to 29.4% of sales during the fourth quarter, which ended Jan. 30 — were driven by improvements in shrink and by an increased selection and sales of the Clover Valley private brand, Dreiling said. Penetration of private-brand sales increased by 1.7% during 2008, due mainly to Clover Valley sales in consumable categories including food, pet food, paper goods and health and beauty.
For the quarter, strong performance in food and consumables helped revenues climb by 11.2% to $2.85 billion. Net income increased by 47.8% to $81.9 million, officials said.
Sales have continued to climb during the first weeks of the new fiscal year, with same-store sales up by 15.1% during February.