Dollar General Celebrates Fresh Milestone

Rollout of fresh food initiative completed during Q2
Gina Acosta, Progressive Grocer
Dollar General Celebrates Fresh Milestone
Dollar General's DG Fresh program aims to save on distribution costs.

Dollar General says it completed the rollout of fresh and frozen food to most store assortments during the second quarter, a period that saw the company continuing to cycle its pandemic gains from last year.

For the quarter ended July 30, Dollar General's income was $637 million, or $2.69 per share,  down from $787.6 million, or $3.12 per share in the prior year quarter. Sales were down 0.4% of $8.65 billion. Same-store sales fell 4.7% but increased 14.1% on a two-year stack basis.

“During the quarter, we made significant progress on many key initiatives, including the completion of our initial rollout of DG Fresh and the opening of our first pOpshelf store-within-a-store concept," CEO Todd Vasos said. "In addition, we executed more than 750 real estate projects, including new store openings in our pOpshelf concept and larger footprint Dollar General formats. We remain focused on delivering value and convenience for our customers, while driving long-term sustainable growth and value for our shareholders. We feel very good about the underlying strength of the business, and we are excited about our plans for the second half of fiscal 2021.”

Dollar General said its second-quarter same-store decline was driven by a decline in customer traffic, partially offset by an increase in average transaction amount. Sales fell in the consumables, seasonal, apparel and home products categories.

During the quarter, Dollar General opened 270 new stores, remodeled 477 stores and relocated 25 stores. Dollar General re-affirmed plans to open 1,050 new stores in fiscal 2021, along with 1,750 store remodels and 100 store relocations.

For the year, Dollar General said "significant uncertainty" continues to exist regarding the severity and duration of the COVID-19 pandemic, including its impact on the U.S. economy, consumer behavior and the company’s business. 

"In addition, such outcomes could be impacted by several variables, which include, but are not limited to, any additional government stimulus payments, economic recovery, employment levels, COVID-19 vaccine status, further disruptions to the global supply chain, and the ongoing impact of the COVID-19 pandemic, including new variants of concern and any corresponding governmental measures such as closures of schools or businesses," the company said.

Yet Dollar General and other discounters are likely to see a sales bump from the Biden administration's plan to increase food stamp benefits. Last week, the United States Department of Agriculture said it is raising average Supplemental Nutrition Assistance Program (SNAP) benefits by more than 25% versus pre-pandemic levels.

Despite the uncertainty and an expected increase in transportation and distribution costs for the remainder of fiscal 2021, Dollar General now expects net sales growth of 0.5% to 1.5%, up from previous guidance for a range of a 1% decline to 1% growth. Same-store sales are expected to fall 3.5% to 2.5% compared with previous guidance for a decline of 3% to 5%. It narrowed its earnings per share outlook is to $9.60 to $10.20, compared to its previous forecast of $9.50 to $10.20.

Goodlettsville, Tennessee-based Dollar General operates more than 17,400 stores in 46 states, employing approximately 140,000 associates. The company is No. 15 on The PG 100, Progressive Grocer’s 2021 list of the top food and consumables retailers in North America. 

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