GOODLETTSVILLE, Tenn.–A healthy gain in sales helped firm Dollar General’s bottom line by 3.4 percent in the second quarter, to $146 million.
Net sales in the quarter, which ended on July 29, rose 11 percent to $3.6 billion, which included a same-store sales gain of 5.9 percent. The retailer attributed the pickup to increases in both customer traffic and average transaction. Dollar General added that sales in home products, along with apparel and seasonal, grew more slowly as shoppers spent less on discretionary items in the quarter.
Gross margin was down 10 basis points to 32.1 percent, which the company attributed to the increase in sales of consumable, which generally have lower rates of gross profit. Selling, general and administrative expenses rose 8.6 percent in dollars but fell 54 basis points as a percentage of sales, to 22.3 percent, due to the sales gain and to cost and productivity initiatives.
Rick Dreiling, Dollar General’s chairman and CEO, said, “In this period of economic uncertainty, we continue to focus on factors that we can control, and we still expect to deliver strong financial performance in 2011.” For the fiscal year as a whole, Dreiling said the company’s sales should increase by 12 to 14 percent, with a rise in same-store sales of 4 to 6 percent.