Same-store sales increased 21.7% in Q1

GOODLETTSVILLE, Tenn. — Dollar General Corp. posted strong sales gains in the first quarter, as consumers continued to flock to its stores for essentials in response to the COVID-19 pandemic.

The company on Thursday reported that net sales increased 27.6% in the 13-week fiscal first quarter ended May 1. Same store sales increased 21.7%.

Operating profit increased 69.2% to $866.8 million. Net income for the first quarter was $650 million, up from $385 million in the first quarter of 2019. Diluted EPS increased 73.0% to $2.56 for the first quarter of 2020 compared to diluted EPS of $1.48 in the first quarter of 2019.

“These are certainly unprecedented times, and our hearts go out to everyone who has been affected by the COVID-19 pandemic,” Dollar General chief executive officer Todd Vasos said. “We are very grateful for those serving on the front lines, 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. As a result of their efforts, we are very pleased to report strong first-quarter financial results.”

Dollar General reported net sales of $8.4 billion in the first quarter, up from $6.6 billion in the first quarter of 2019. That increase reflected positive sales contributions from new stores and growth in same-store sales, modestly offset by the impact of store closures. Same-store sales increased 21.7% compared to the first quarter of 2019, driven by increases in both average transaction amount and customer traffic. Same-store sales increased in each of the consumables, seasonal, home products and apparel categories, with biggest gains in the home products category.

Dollar General said consumer behavior driven by COVID-19 had a significant positive effect on net sales and same-store sales, as well as on gross profits.

Gross profit was 30.7% of net sales in the first quarter, up from 30.2% in the comparable prior year period. The increase was primarily due to a reduction in markdowns as a percentage of net sales and higher initial markups on inventory purchases. That benefit was partially offset by an increase in distribution costs, which were driven by increased volume and discretionary bonus expenses.

“Looking ahead, we remain committed to our operating priorities and strategic initiatives to drive continued growth and meaningful long-term value for shareholders,” Vasos said. “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.”