Earnings miss doesn’t derail Dollar General’s growth
GOODLETTSVILLE, Tenn. — Sales and profits continued to pile up at Dollar General during the first quarter as shoppers sought value at the retailer’s 9,500 stores.
The company reported a 5.4% increase in same-store sales and said total sales increased 10.9% to $3.45 billion during the quarter ended April 29. Profits adjusted to account for several one-time items increased 14% to $166 million, while earnings per share of 48 cents were 2 cents shy of analysts’ consensus estimate due to gross margins pressures.
An earnings miss typically is disconcerting to investors, but in Dollar General’s case, the shortfall was offset by stronger-than-expected sales growth and an expansion story that remains intact. The 5.4% first-quarter same-store sales increase was on top of the prior year’s first-quarter gain of 6.7%, and the company noted the improvement results from a blend of increased customer traffic and higher average transaction sizes. The addition of new stores also helped the top line as the company opened 139 new stores and relocated or remodeled another 184 units.
“Dollar General is off to a great start in 2011,” said Rick Dreiling, Dollar General’s chairman and CEO. “As I look back on the first quarter, we maintained our focus on serving our customers and worked to hold the line where we reasonably could when it came to raising prices in an environment of rising commodity and fuel costs. Our customers are depending on Dollar General more than ever for consistent value and convenience.”
The decline in gross margins to 31.5% from 32.1% that caused the earnings miss resulted from the combination of markdowns of winter home and apparel merchandise and increased sales of lower-margin consumables. Pressures in those areas were offset by reduced inventory shrink and greater distribution efficiency, according to the company.
“In spite of expected gross margin headwinds, we remain well-positioned to deliver on our financial outlook for fiscal 2011 as we invest for the long-term health of the company,” Dreiling said.
The company’s full-year expansion plans call for the addition of 625 new stores and the remodeling or relocation of approximately 550 stores.
Consumers make small changes to deal with rising gas prices
WASHINGTON — According to a AAA telephone survey released last week, more than half of those surveyed have adopted such relatively simple conservation changes as utilizing trip chaining, reducing shopping trips, dining out less and driving less because of higher gas prices.
As many as 62% of respondents already have combined shopping trips and errands, and if the price of gas should reach $5 per gallon, 68% reported they would combine trips.
Meijer’s Simply Give program surpasses $2 million mark
GRAND RAPIDS, Mich. — Meijer announced that its most recent food pantry donation program has exceeded $2 million in total food donations.
According to the retailer, its latest Simply Give program, which ran from March 20 through May 14, garnered more than $270,000 in donations for 195 local food pantries. Overall, the program, which debuted in November 2008 and aims to replenish the shelves of local food pantries in each city and town where a Meijer store is located, has helped to feed more than 250,000 families throughout the Midwest.
"We appreciate the support and commitment of our generous customers as we reach out to those in our local communities who need help in the fight against hunger," Meijer EVP operations Janet Emerson said. "We are extremely proud to have surpassed the $2 million donation mark and, with the support of our customers, plan to continue to help ease the burden of local food pantries."