Dollar General 2Q15 Earnings Call Notes

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Same store sales strong in may weak in June, but stronger in July

“Same-store sales started out strong in May with June being weaker and sales strengthening in July. It is my belief that this was reflective of the weak overall U.S. retail sales report for June and mirrors what you have heard from some other retailers. Sales per square foot reached a record $225.”

Relatively new CEO

“Thank you, John. As I approach the conclusion of my first 100 days as CEO, I am as excited as ever about the opportunities ahead of us at Dollar General. I feel great about the team that we have in place, and I am confident that Jeff and Jim will play an important role in Dollar General’s long-term success. The team is energized and excited as we look to help our consumers save time, save money every day.”

As weather normalized, sales rebounded from June

“When we looked at our sales, it really did mirror, I think, what the nation saw at retail out there. What we saw was once we got through the month of June and into July, the weather patterns normalized, the heat returned and those torrential rains in Texas and Oklahoma and other areas subsided. And we saw a return to a little bit of a normal pattern where our consumable and non-consumable businesses both did very well as we moved into the weeks of July to the end of July. So, that’s what gives us confidence in our guidance for the full year in sales because we’ve seen that our sales have rebounded from that dip in June.”

Haven’t seen consumer spending more with higher wages

“we really haven’t seen any indication that the consumer is spending anything more because she has additional wage money in her pocket. But again, our core consumer is a little different in that before she starts to spend, she really needs to have confidence and see a sustained ability that income will continue to come her way.”

The calendar shift of labor day is making some anxious but back to school has been good where not affected by it

“the calendar shift has caused a little angst probably out there with the consumer, only from the standpoint that Labor Day has been pushed back a week, as you know. And most states with schools, they sort of key off of that Labor Day date. So in a lot of cases what we’ve seen is that the back-to-school has been pushed back in the calendar a little bit.

Now the great thing here at Dollar General that we’ve seen is that where school has already started, our back-to-school comps are hitting and/or exceeding our expectation. So we feel very good about that”

Going to open 900 locations next year

“We’re going to open 730 new units this year and we’re targeting about 900 new units next year and we continue to see these new units perform at about 85% the comp base. And we continue to see them, as I said, deliver great returns”

Competitive environment is rational

“I have to say that the environment is still very rational. And when we look out, we don’t see anything that’s structurally – where that changes.”

Currently have 12k stores going on 13k

“When you look out across our store base and the beauty of Dollar General is we got over 12,000 stores and working our way to 13,000 stores. And as you can imagine, in some areas, we’ve got better standards than others, and we’re always working to make sure that we better our standards”