Consumables drive sales at Dollar General
The retailer reported first quarter fiscal results for the period ended May 5. Same store sales rose 0.7 percent, slightly above the 0.6 percent growth expected by analysts.
The consumables and apparel categories provided a boost to the comparable-store sales while the seasonal and home categories had a negative impact. Sales in the Consumables category increased 6.8% to $4,315.5 million, while the Seasonal category witnessed a rise of 6.2% in sales to $662.6 million. Home products sales increased 3.2% to $333.2 million and Apparel category sales grew 6.7% to $298.3 million.
The company's net income fell to $279.5 million, or $1.02 per share, in the quarter, from $295.1 million, or $1.03 per share, a year earlier. Net sales rose 6.5 percent to $5.61 billion.
"For the first quarter of 2017, I am pleased with our earnings results which reflect solid management of the business in a difficult retail environment as we overcame our most challenging comparisons from the prior year. Our same-store sales improved as we moved past the delay in income tax refunds and the timing shift of the later Easter holiday. We continue to execute on our focused strategy and implement our operating initiatives which we believe will improve customer traffic and transactions,” said Todd Vasos, Dollar General’s chief executive officer.
Increased pay, a new format, digital initiatives, expanded fresh departments and a lot more stores is Dollar General Vasos' formula for growth.
Gross profit, as a percentage of net sales, was 30.3 percent in the 2017 first quarter compared to 30.6 percent in the 2016 first quarter.
During the 2017 first quarter, the company opened 293 new stores and remodeled or relocated 301 stores.
In April the Federal Trade Commission approved the company’s proposed purchase of 322 store locations in 36 states. The transaction is expected to close this month. The store sites are anticipated to be converted to the Dollar General banner by the end of November. The acquisition of these sites is expected to be incremental to the company’s 2017 new store growth by approximately 290 new stores over the prior guidance of 1,000 new stores for fiscal 2017.
Dollar General's plans to open 1,000-plus stores this year is simply astonishing in the broader context of the retail industry. Store closings are at record levels due in large part to department stores and specialty retailers rationalizing their operations but other successful retailers are still moderating their physical aspirations to allocate greater resources to bolster technology and supply chain capabilities to better serve consumers' desires for a seamless physical and digital experience.
Click here to read more about Dollar General's formula for growth.