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Mar 09, 2023

Consumables Boost Dollar General Q1 Sales

First quarter sales at Dollar General increased more than 6% with the growth

First quarter sales at Dollar General increased more than 6% with the growth driven largely by positive sales contributions from new stores and growth in same store sales.

For the 13-week period ended May 5, net sales hit $9.3 billion, an increase of 6.8% when compared to the first quarter of 2022. Same-store sales growth of 1.6% was the result of an increase in average transaction amount, partially offset by a decrease in customer traffic.

According to company officials, the retailer's consumables category had same-store sales growth of 4.3%, while non-consumable categories such as seasonal, home, and apparel had a same-store sales decline of 8.5% as shoppers continue to shift away from discretionary goods.

The company reported net income of $514.4 million for the first quarter of 2023, a decrease of 6.9% compared to $552.7 million in the first quarter of 2022. Diluted earnings per share (EPS) decreased 2.9% to $2.34 for the first quarter of 2023 compared to diluted EPS of $2.41 in the first quarter of 2022.

"While the macroeconomic environment has been more challenging than expected, particularly for our core customer, we are confident in Dollar General's ability to deliver strong growth in the years ahead, despite the near-term pressure that impacted our first quarter sales results and is anticipated to impact our full-year sales and EPS," said Jeff Owen, Dollar General's chief executive officer.

During a conference call to discuss first quarter results, Owen said Dollar General continues to see signs of increasing financial strain on its shoppers. He noted they are seeking affordable options, including an increased reliance on private brands and items at or below the $1 pricepoint.

"While past experience suggests our customers will adjust their budgets after a couple of quarters, we are taking action now to better support them both in the near and longer term," he said. "We are taking action to provide even more affordable solutions and lower prices for our customers."

That action includes pursuing efficiencies in the company's cost structure, refining its inventory management process, and prioritizing capital expenditures to maintain flexibility and enhance its focus on Dollar General's core business.

Additionally, Dollar General is slowing the rollout of pOpshelf, a store-within-a-store concept that features a vast majority of items priced at $5 or less. The assortment includes a variety of product categories including seasonal and home décor, health and beauty must-haves, home cleaning supplies, household and specialty items, arts and crafts, party planning and entertaining needs, and toys.

The retailer now plans to open approximately 90 stores with pOpshelf this year compared to the original plans of approximately 150 openings.