- Dollar General recorded a significant improvement in its financial results during the second quarter of 2022 as the discount retailer saw “accelerated growth in market share” of consumables, according to a Thursday earnings report.
- The company generated a 4.6% increase in same-store sales during Q2, reversing the slight decline in that metric it posted during the previous quarter, as net sales, profits and earnings also all improved. Rival Dollar Tree also reported strong second-quarter results on Thursday.
- Discount retailers are benefiting as the fast-rising food prices that have shaken the economy in recent months drive consumers to stores that focus on bargain-priced goods.
Dollar General’s latest financial results underscore the value to the company over the past few years of focusing on consumer staples like fresh and frozen foods.
The retailer noted in its earnings report that its consumable sales powered its results during Q1, adding that its strong performance in that category contrasted with sagging sales of apparel, seasonal goods and home products.
Dollar General reported net sales of $9.4 billion for Q2, a 9% year-over-year increase. By comparison, net sales in its first quarter grew 4.2% year-over-year, to $8.8 billion.
The retailer’s operating profit was up 7.5% in Q2 compared with the same period in 2021, to $913.4 million. By contrast, Dollar General saw its operating profit plummet by just under 18% on a year-over-year basis during the first quarter, to $746.2 million. The company’s diluted earnings per share also turned positive in the second quarter after sliding in Q1, and it saw a slight increase in traffic at its stores.
Dollar Tree, which operates stores under the Dollar Tree and Family Dollar brands, saw overall comparable-store sales rise 4.9% in the second quarter compared with the same period in 2021, as consolidated net sales rose 6.7%, to $6.77 billion, and operating profit was up by more than 25%.
“Our second quarter performance reinforces the relevance of our brands for millions of households pressured by higher costs for food, fuel, rent and more,” President and CEO Mike Witynski said in a statement.
Dollar General also said Thursday that Chief Financial Officer John Garratt will add the title of president, effective Sept. 1. With the promotion, Garrett, who has served in his current role since 2015, will take on oversight of the retailer’s healthcare-related operations and its expansion to Mexico. The announcement follows the company’s disclosure last month that CEO Todd Vasos will retire on Nov. 1 and be replaced in the position by Chief Operations Officer Jeffery Owen.
Dollar General added that it is tapping the brakes on its growth efforts as difficulty obtaining construction materials and permits impede its ability to add more stores to its fleet. The retailer now expects to debut between 1,010 and 1,060 stores in 2022, down from its previous goal of adding 1,110 new locations during the year,
The company said it plans to focus more heavily on store renovations in 2022 than it had earlier planned. Dollar General now expects to remodel about 1,795 stores this year, up from its previous estimate of 1,750. The company also plans to relocate about 125 stores during 2022, compared with the 120 moves it had been planning to undertake.