‘Trade-Down’ Shoppers Boost Dollar General

GOODLETTSVILLE, Tenn. — Dollar General last week said efforts to broaden its customer appeal helped the company increase earnings by 47% and sales by 10.4% during the fiscal second quarter.

Sales of $4 billion and earnings for $214 million were slightly above analyst estimates and prompted the company to increase its guidance for sales and earnings for the fiscal year. Same-store sales increased by 5.1% as store traffic and average ticket increased during the period, which ended Aug. 3.

Richard Dreiling (right), chief executive officer, in a conference call discussing results said the company was experiencing the benefits of serving a core customer base which relies on Dollar General for basic needs, but also a growing number of higher-income “trade-down” customers who are recognizing the company’s efforts to improve merchandise quality and presentation at stores. New deals with eyewear brand Foster Grant and Nestlé’s Edy’s and Dreyer’s ice cream brands are recent examples of the boost in quality offerings.

“I think the merchants over the last year have done a wonderful job of improving the quality of the product and maintaining the retail price — and the costs, for that matter,” Dreiling said. “And I think people are recognizing that we are offering values now that are pretty consistent on a day-in and day-out basis.”