Dollar General Ready to Attack Soft Goods
By James Mammarella -- Home Textiles Today, 4/6/2009 12:00:00 AM
Goodlettsville, Tenn. —
Neighborhood discounter Dollar General, coming out of a very good 2008, is ready to extend its merchandising power from consumable products to softlines.
The $10.4 billion retailer is "just as committed to driving the non-consumable side of the business" as the consumable side, said chairman and ceo Rick Dreiling to analysts on its earnings call.
For the year ended January 30, the 8,400-store company recorded net income of $108.2 million vs. the net loss of $12.8 million during the prior year (which included the transition of Dollar General from a publicly held to a privately held company).
Sales of $10.4 billion were up 10.1% from $9.5 billion; comps grew by 9.0%.
During 2008, Dollar General made measurable gains in sales, margin, cost control, and profits — and even worker morale. The full senior executive staff is now in place, Dreiling noted. He added, "Our store manager turnover at its lowest level in 15 years."
Dreiling said the company is already making changes in the buying and merchandising of its soft goods side, and expects to see real results by end of year. Dollar General, he said, has just completed its 19th consecutive year of same-store sales growth, and believes it is experiencing more traffic from "trade-down" consumers. He spoke of "a new consumerism" and said he believes that "saving money is going to be popular for a very long time."
Dollar General intends to capitalize on these trends. Its greatest gains have been in its largest segment, which it calls the "highly consumable" category, and which registered a 14.7% increase in sales year-to-year. "Seasonal" goods edged up just 0.5%, and the main softlines segment, "basic clothing," turned in a 3.8% rise.
The fourth segment, however, "home products," saw sales fall 0.9% in 2008. Signaling that will no longer be acceptable, the company is targeting "trade-down" shoppers and others as it shapes up its sourcing and buying leadership for apparel and home.
Days after its earnings call, Dollar General issued a statement that it plans to open 450 stores this year, which will "create up to 4,000 jobs" in the 35 states where it currently does business.
"Our growth will add positions in many markets severely hit by the recession," said Bob Ravener, Dollar General svp and chief people officer.
Dollar General Corp. and Subsidiaries
| QTR. 1/30 ($millions) | 2009 | 2008 | %CHANGE |
| a. Full year 2008 results are a pro forma consolidated statement of operations developed by applying pro forma adjustments to the historical consolidated statements to operations; figures combine the results of the predecessor and successor companies to the merger with Buck Acquisition Corp. (Q4 results are from successor only.) b. There is no per share data; the company is privately held. |
|||
| Sales | $2,845.8 | $2,559.6 | 11.2% |
| Oper. Income (EBIT) | 222.8 | 186.5 | 19.5 |
| Net income | 81.8 | 55.4 | 47.6 |
| Per share (diluted) | — b | — b | — |
| Average gross profit | 29.4% | 28.9% | — |
| SG&A expenses | 21.7% | 21.6% | — |
| FISCAL YEAR a | |||
| Sales | $10,457.7 | $9,495.2 | 10.1% |
| Oper. Income (EBIT) | 580.5 | 255.4 | 127.3 |
| Net income | 108.2 | (12.8) | — |
| Per share (diluted) | — b | — b | — |
| Average gross profit | 29.3% | 27.8% | — |
| SG&A expenses | 23.4% | 24.1% | — |
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Dollar General ready to attack soft goods
Mar 24, 2009
