Dollar General is betting it can capitalize on what it calls a “significant opportunity” to power through fiscal year 2024.
The Goodlettsville, Tenn., retailer held its fourth quarter earnings call on Thursday with CEO Todd Vasos claiming solid progress was made on the company’s “Back to Basics” strategy, which was put into action when Vasos came out of retirement and returned as the company’s CEO last year.
From a performance perspective, however, Q4 was a lackluster one as net sales decreased 3.4% year over year to $9.9 billion and operating profit dropped 37.9% to $579.7 million. Fiscal year 2022 did have a 53rd week.
Same-store sales did improve 0.7% year over year, and Dollar General also reported gains in traffic growth and market share.
“We were pleased to deliver fourth quarter top- and bottom-line results at the upper end of our internal expectations,” said Vasos. “With customer traffic growth and market share gains during the quarter, we believe our actions are resonating with customers as they turn to Dollar General for our unique combination of value and convenience.”
Before the fourth quarter ended, Dollar General took another important step toward becoming a major player in the produce department by partnering with AI technology provider Shelf Engine. The two rolled out automated AI ordering technology for produce, which will be in about 3,000 general stores.
The discount retailer announced an exclusive home fragrance line, Club92, in January. The line includes scented candles, wax melts, and reed diffusers priced between $3 and $8.
Fiscal year 2023 produced solid numbers as net sales increased 2.2% vs. 2022 to $38.7 billion. The net sales increase was primarily driven by positive sales contributions from new stores and growth in same-store sales, which increased 0.2% year over year.
Gross profit as a percentage of net sales was 30.3%, a drop of 94 basis points year over year, and operating profit decreased 26.5% to $2.4 billion.
Dollar General’s reported net income of $1.7 billion for fiscal year 2023 was down 31.2% vs. 2022.
Vasos warned that same-store sales in the first quarter of 2024 could be the lowest of the new fiscal year for Dollar General, but the remaining quarters should be strong.
Net sales growth is projected to fall in the range of 6% to 6.7% while same-store sales growth is expected to be between 2% and 2.7%.
The discount retailer also plans on opening 800 stores, relocating 85 more, and remodel 1,500 locations. Dollar General opened its 20,000th store in Alice, Texas, in late February.
