How Dollar General plans to gain momentum on heels of strong Q1 results

Dollar General plans to capitalize on better-than-expected first quarter earnings and remain well-positioned to capture market share in a changing retail landscape.

Net sales for the period ended May 5 rose 6.5% to $5.61 billion, compared with $5.27 billion in same period last year. Despite a decline in traffic, same-store sales saw a 0.7% lift over the last year’s quarter. This boost was thanks to an increase in average transaction amount, and driven by positive results in the consumables and apparel categories.

"It plans to increase its offering of value-added differentiated products with a focus on health and wellness, nutrition and personal care.”

Dollar General’s first priority is to continue to drive profitable sales growth. To attract new customers and grow its consumer base despite a challenging retail environment, the discount retailer plans to expand merchandising initiatives in its existing stores. So far, Dollar General has executed these initiatives across all four product categories in a select group of stores and has said these are performing at or above expectations. One of the biggest changes this new approach has delivered can be seen in the retailer’s health and beauty category. “We have a significant opportunity to increase our share of wallet with our customers through trial and conversion,” said Dollar General CEO Todd Vasos about the merchandising changes the retailer has made in health and beauty. “In beauty, we have redesigned the cosmetic area in the vast majority of our stores to showcase the breadth of on-trend products that we offer at compelling price points.”

Vasos said these changes, which have been made across nearly 12,000 store locations, have already contributed to an improvement in same-store sales. And the retailer is not done yet. It plans to increase its offering of value-added differentiated products with a focus on health and wellness, nutrition and personal care.

Vasos added that the merchandising team is working to refine and execute Dollar General’s long-term strategy framework to differentiate it from the competition over time.

“We have ongoing opportunities for gross margin expansion through improvements in shrink, global sourcing, private brands, distribution and transportation efficiencies and non-consumable sales,” he said. “As always, we will continue to work to ensure that our value preposition resonates with our customers. We are committed to providing them with everyday low prices that they know and trust from us. Our goal is to ensure, we are highly relevant for our customers through our ongoing price investment in everyday low price and targeted promotional activity.”

 

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