Dollar General Q1 Net Up Slightly

Dollar GeneralGOODLETTSVILLE, Tenn.-While sales made a healthy gain in the quarter, rising expenses dampened the bottom line for Dollar General, whose net income edged up 1.1 percent to $222.4 million.

Net sales totaled $4.5 billion, up 6.8 percent and including a same-store sales increase of 1.5 percent. Rick Dreiling, Dollar General’s chairman and CEO, noted that the dollar-store retailer’s top line was hurt early on in the quarter, which ended on May 2, by the unfavorable winter weather, stiffer competition and the laggard economic environment. Sales gained momentum as the quarter moved into April, with customer traffic and average transaction amount making gains, Dreiling said.

Selling, general and administrative expenses increased 8.7 percent in dollars and 37 basis points as a percentage of sales. Gross margin fell 57 basis points to 30 percent, due to sales gains in lower-margin consumables and higher markdowns.

For the fiscal year as a whole, Dollar General said it expects total sales to gain from 8 to 9 percent, with same-store sales increasing from 3 to 4 percent. “The volatility of the macroeconomic environment continues to pressure the consumer and impact the company’s cost of purchasing and delivering merchandise to its stores,” the company said. “Management continues to closely monitor customers’ responses to the economic and competitive climates.”