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DG makes headway in home
Dollar General had a lot to say about its third quarter during the company’s earnings conference call, including strong trends in its home business, a plan to boost domestics, a major store expansion strategy, and the reassurance that it remains committed to buying competitor Family Dollar in a hard-fought effort that it hopes will make it the U.S.’ biggest discount retailer in its category.
But before commencing the question-and-answer part of presentation for investors, analysts and media, the call moderator stated Dollar General executives would not entertain queries about its acquisition of Family Dollar.
Rick Dreiling, chairman and ceo, said only this: “We expect to provide an update on our offer in time for Family Dollar shareholders to review such information prior to the Family Dollar shareholders' meeting scheduled for December 23, 2014."
For the quarter, ended Oct. 31, net income ticked down 0.4% to $236 million, or $0.78 per diluted share. Adjusted net income increased 3% to $239 million, and adjusted earnings per diluted share grew 10% to $0.79.
Net sales rose 7.8% to $4.72 from $4.38 billion, and same-store sales increased 2.8% – representing the chain’s 27 th consecutive quarter of year-over-year increases in both customer traffic and average transaction.
Consumables sales continued to increase at a higher rate than non-consumables overall, with the most significant growth related to tobacco products, perishables and candy and snacks.
The company was also encouraged by the solid same-store sales growth in home products and apparel in the third quarter. DG plans to expand these categories domestics within home in 2015.
“We are extremely pleased with the growth in our home and apparel,” Dreiling said. “Our effort with trends and affordability have begun to take hold with our customer.”
Also strong were $1-$5 bargain goods, a segment DG is reinforcing again with renewed focus, he continued.
“In the quarter, more than 75% of our skus, or 78% of quarterly sales, were items priced at $5 or less,” he noted.
A major push in 2015 is store count, which the company plans to ramp up with 730 new units – including its first stores in Maine, Rhode Island and Oregon – and 875 relocations and/or remodels.
At the end of the third quarter, Dollar General operated 11,715 stores in 40 states.
Year to date, net income inched up 1% to $710 million, or $2.32 per diluted share. Adjusted net income was $713 million, or $2.33 per diluted share.
Year-to-date net sales were up 7.4% to $13.97 billion, and same-store sales grew 2.1%, thanks to increases in customer traffic and average transaction amount.
Source: Home & Textiles Today