Dollar General 2Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Consumer still cautious

“Our second quarter same-store sales began very strong, with a year-over-year increase in May of more 3.5%. However, this growth moderated as we moved through June and July, given the competitive environment in a consumer who although resilient in the face of economic uncertainty, remains cautious with their spending. ”

low and middle end is continuing to struggle

“You’ve heard other retailers say this, low and middle end consumers are continuing to struggle. They have changed their buying habits. Data now suggests that out of necessity, many folks have reduced their overall consumption and absolute unit growth across Nielsen measured channel data supports this. While our customer always finds a way to work through difficult time, she is struggling to overcome the sustained nature of the headwind she is facing.”

11k stores

“At the end of the second quarter we had 11,535 stores with 85.2 million square feet of selling space in 40 States”

Back to school has been strong

“I would like throw out back to school for us, we are having a very good back to school right now. Our back to school categories, we’re up 4.5% right now. In fact this week which is the first of two really intense weeks, we are actually up over 7% in the categories that are related to back to school. And I relate that to the fact that the environment has cooled down and everyday low price has a lot more value right now.”

Rural/urban stores tend to work out to the same margin

“Our rural stores tend to do very well. They operate at a lower volume rate than the urban stores and they tend to have a lower expense structure than the urban stores. Both stores tend to carry about the same margin in all honesty.”

Back half will be competitive but not irrational

“as we move through the back half of the year, I think the competitive environment will be heightened, but I don’t think it’s going to irrational.”

The consumer is focused on events

” think the activity in the consumer is more focused around certain specific events. And I think Labor Day and we are prepared for a pretty intense Labor Day but then we think things will probably settle down for a period of time. We are ready to go for Black Friday. We’ve got our Christmas plan in place and I see no deviation from what we have laid out.’

Concerns about dockworkers strike

“The other thing I’d like to throw out there, I’m sure you guys are aware there’s an import strike scare out there. And we made a conscious decision to bring some of our holiday merchandise in a little sooner.”