Pricing, Convenience Drive Dollar General’s Q1 Results

GOODLETTSVILLE, Tenn. — Saying its combination of convenience and everyday low prices resonates with recession-addled consumers, Dollar General posted increases in sales, earnings and gross margins during the first quarter.

GOODLETTSVILLE, Tenn. — Saying its combination of convenience and everyday low prices resonates with recession-addled consumers, Dollar General [2] posted increases in sales, earnings and gross margins during the first quarter.

Net income of $136 million was up 64%, and gross margin as a percentage of sales improved 136 basis points to 32.1%, as improvements in merchandising, buying and sales mix lowered costs. Total sales improved 11.9% to $3.1 billion, with comparable-store sales increasing 6.7%, the discounter said Tuesday. Both store traffic and average ticket improved.

“We continue to see the quest for value at all economic levels is very real,” Rick Dreiling [3], chairman and chief executive officer, said in a conference call Wednesday, adding that Dollar General’s EDLP strategy has helped assure customers in uncertain economic times. “It’s about consistent prices that the customer knows they are going to get everyday.”

The results prompted the retailer to adjust its earnings guidance for the fiscal year to a range of $1.62 to $1.69 a share, up from a previous forecast of $1.55 to $1.63.

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