DG sales up big in Q1, fiscal 2020

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DG sales up big in Q1, fiscal 2020

By Dan Ochwat - 05/28/2020

COVID-19 boosted sales at yet another retailer, Dollar General reported same-store sales growth of 22% through May 26 versus a year ago, as well as a same-store sales for the first quarter are up 21.7%, compared with Q1 2019.

Net sales for the first quarter increased by 27.6% to $8.4 billion compared with $6.6 billion in Q1 2019. Operating profit for the first quarter of 2020 increased by 69.2% to $866.8 million, compared with $512.2 million in the first quarter of 2019.

The discounter said the rise in sales can largely be attributed to shopping behaviors during the coronavirus pandemic and that the large gains are keeping its growth plans for the year on track. The retailer said that it still expects to open 1,000 new stores, remodel 1,500 others and relocate 80 stores in 2020.

During its May 28 earnings call, the retailer outlined its COVID-fueled sales trajectory saying that in February, comp sales were up 5.5%, a positive result but leaped in March to a 34.5% increase. April moderated, but comp sales were up 21.5%, with non-consumables being the bright spot.

Officials also noted on the call that that retailer's “private brands continue to be a priority” as they are driving profitable sales growth. The recent repositioning of its own brands proved to be profitable in the first quarter, including a new laundry line under its TrueLiving brand.

Its Clover Valley food brand launched with 250 more items during the quarter, and Dollar General said more will be added to the line in the coming year.

The Clover Valley brand expanded by 250 products in Q1 and will add more going forward.
From the Dollar General earnings call

Clover Valley feeds into the chain’s aim toward better-for-you products, which the retailer said will be expanded to 7,000 stores by year's end — up from 6,000.

The retailer said it also will continue to add cooler doors to stores, adding 5,000 by the end of the year to its 15,000 out now. The cooler doors are a key component to the DG Fresh refrigerated and frozen initiative.

As for its convenience shopping initiatives, executives told analysts that the DG pickup service launched in Q4 and had positive feedback, and that it could be scaled quickly as needed.  DG mobile checkout is in 750 stores and will expand along with self-checkout solutions, which currently are offered in more than 30 stores.

“Looking ahead, we remain committed to our operating priorities and strategic initiatives to drive continued growth and meaningful long-term value for shareholders,” said Todd Vasos, Dollar General’s CEO. “As one of America’s essential retailers, we believe our unique brick-and-mortar footprint positions us well to continue delivering value and convenience for our customers, particularly at a time when they need us most.”

The retailer has addressed the COVID-19 situation by awarding $60 million in bonuses to frontline employees, adjusted benefits temporarily for those with a coronavirus diagnosis, following social distancing protocols such as barriers at checkout, hand sanitizer, masks and gloves for employees, donated $250,000 to the Dollar General Employee Assistance Foundation, and awarding discounts to first responders.

The retailer also recently announced it would be awarding $2 million to Save the Children’s coronavirus response efforts across rural America, assisting the nonprofit to help educate and feed children nutritious foods while schools are closed.

“These are certainly unprecedented times, and our hearts go out to everyone who has been affected by the COVID-19 pandemic,” Vasos said. “We are very grateful for those serving on the frontlines, and particularly our store associates, distribution center employees and private fleet drivers for their incredible efforts. In the midst of a very challenging operating environment, our team members have been tirelessly committed to fulfilling the company’s mission of serving others, and we could not be more proud of how they have responded to the needs of our communities.”

Target, BJ’s Wholesale and Costco recently announced big first-quarter gains but Albertsons, Kroger and virtually every grocer has been reporting positive gains during COVID-19 pandemic shopping.