Same-store sales slip despite increased traffic

GOODLETTSVILLE, Tenn. — Dollar General Corp. today posted mixed financial results for its third quarter, with profits falling while sales topped expectations on increased customer traffic and the opening of new stores.

A 1.3% decline in same-store sales was smaller than had been forecast.

Dollar General posted a profit of $276.2 million in the quarter ended November 3, down from $562.2 million in the comparable period last year. Revenue was up 2.4% year on year to $9.69 billion.

“While we are not satisfied with our financial results for the third quarter, including a significant headwind from inventory shrink, we are pleased with the momentum in some of the underlying sales trends, including positive customer traffic, as well as market share gains in both dollars and units,” CEO Todd Vasos said. “We continue to believe our model is relevant in all economic cycles, and we are working diligently to further enhance our unique combination of value and convenience.”

Vasos rejoined DG as its CEO during the quarter after Jeff Owens was let go, a change in leadership aimed at restoring stability and confidence in the company. Vasos had previously served as CEO from June 2015 to November 2022.

Third-quarter sales were influenced by a decline in average transaction amount, partially offset by increased store traffic. Shoppers spent less on apparel, consumables, home goods and seasonal merchandise.

Gross profit as a percentage of net sales was 29% in the third quarter, down from 30.5% a year earlier. Operating profit declined 41.1% to $433.5 million.

The third quarter closed with total merchandise inventories, at cost, at $7.4 billion compared to $7.1 billion a year earlier, a decrease of 1.8% on a per-store basis.

Dollar General added 990 U.S. stores in the quarter, which took its store count to 19,726. The company said it remodeled 2,000 stores in the quarter and relocated 120 stores.

For fiscal 2024, the company plans to execute approximately 2,385 real estate projects, including approximately 800 new store openings, including about 30 pOpshelf locations and 15 new stores in Mexico). It expects to remodel 1,500 stores next year.

“I am excited to be back at Dollar General and working with the team to fulfill our mission of serving others every day,” Vasos said in the earnings statement. “Over the last several weeks, we have spent significant time reviewing all areas of the business, and we have identified key opportunities for improvement both in the near term and over the longer term.”