Dollar General Corporation
CEO : Mr. Jeffery Carl Owen
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q4 | 17.9% YoY | 17.1% | 14.7% | 2023-03-16 |
Jeffery Owen says,
expect the following initiatives to have a significant impact on the stock’s movement:
Popshelf Expansion
- The company plans to more than double the pOpshelf store count in 2023, bringing the total number of pOpshelf stores to nearly 300 by year-end, and aims to have approximately 1,000 locations by year-end 2025.
- While sales have been somewhat softer than earlier results due to the economic environment, the company is pleased with the customer response.
DG Fresh Initiative
- The company’s strategic shift to self-distribution of frozen and refrigerated goods through DG Fresh has resulted in increased profitability of its perishables offering and enhanced product offerings in stores.
- The company is delivering perishable products to more than 19,000 stores from 12 facilities, and expects to realize additional benefits from DG Fresh as it continues to optimize its network.
Real Estate Growth
- The company plans to execute approximately 3,170 real estate projects in the United States in 2023, including 1,050 new stores, 2,000 remodels and 120 store relocations.
- The company’s ability to innovate on store formats continues to be an important strength, with multiple formats expected to drive strong returns in the year ahead.
Digital Initiative
- The company is creating a digital front porch for customers to enhance convenience and access, with approximately 4.5 million monthly active users on its mobile app at the end of 2022 and plans to further enhance its digital offerings.
- The company’s partnership with DoorDash provides same-day delivery in an hour or less and is available in nearly 14,000 stores, with plans to extend to an additional 1,000 stores in 2023.
Fast Track Initiative
- The company’s Fast Track initiative focuses on enhancing customer convenience and labor productivity in its stores through rolltainer optimization, self-checkout, and increasing utilization of emerging technology and data strategies.
- The company plans to have a self-checkout offering in more than 13,000 stores by the end of 2023, including the full self-checkout option in more than 2,000 stores.
John Garratt says,
Customer Behavior and Economic Environment
- The termination of SNAP benefits and lower tax refunds may further pressure the low-income customers in the near term.
- The customer is in a different place now, and shopping behaviors indicate an economically strained customer.
- The company believes that the customer needs them even more in tough environments.
Sales and Earnings Guidance
- EPS growth is expected to be a back half story.
- The company expects sales comp to be relatively even between the first half and the second half, slightly higher in the second half.
- Continued headwinds are anticipated from sales mix pressure, higher interest expense, and increased shrink and damages in the first half.
- A sizable benefit is expected in the second half from lapping significant supply chain costs and winter storm impacts from the second half of 2022, as well as the benefit of the initiatives that the company is driving.
- Q1 is expected to face headwinds, including estimated year-over-year increase in interest expense, inventory damages, and residual impact of storage capacity constraints and related supply chain inefficiencies, and year-over-year net impact pressure from labor investment.
Q & A sessions,
Challenging Results Over Last Two Quarters
- Disappointed in results
- Team dedicated to executing and innovating over long term
- Investing in strategic initiatives to serve customers better and more profitably
Investment in Store Hours and Standards
- Investing in store hours to elevate store standards and consistency
- Tested and learned in 2022 for improvement in 2023
- Improved supply chain and in-stock availability to better serve growing customer base
Customer Behavior and Response
- Customer still employed but worse off financially due to food inflation
- Customer relying more on savings, credit cards, and borrowing money
- Customer leaning into dollar price point and private brands, shifting towards consumables
DG Media Network and Digital Acceleration
- Excited about DG Media Network and ability to connect with rural population
- Partnerships with CPG partners to drive growth in operating profit and reinvest in business
Market Share Gains and Donor Strategy
- Market share gains in consumable and non-consumable segments of business
- Donors primarily drug, but expect to continue refining assortment with strategic initiatives
Capital Allocation Priorities and CapEx
- Investing in business first, then returning excess cash to shareholders
- CapEx up due to inflation and growth opportunities in new stores, remodels, and strategic initiatives
No bad stock 