Dollar General Investor Day Notes

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Todd Vasos

We check prices every two weeks

“we check prices every two weeks in our top 250 and we check prices across our entire 10,000 SKU portfolio about once a quarter against again all the disciplines you see here of mass grocery and drug. So we know every two weeks exactly where we stand on retail prices on the shelf.”

Being out of stock is about the worst thing you can do to a customer

“we check prices every two weeks in our top 250 and we check prices across our entire 10,000 SKU portfolio about once a quarter against again all the disciplines you see here of mass grocery and drug. So we know every two weeks exactly where we stand on retail prices on the shelf.”

Opening 1000 stores in 2017 with an 18-20% return on investment

“Number two is capturing those growth opportunities. With 13,000 opportunities out there, we opened up 730 stores last year, we’re opening up 900 this year and I’m sure many of you saw we announced yesterday we’re going to open up 1000 stores in 2017. That’s aggressive growth but it’s growth that we can manage and when you look at the returns, I don’t know about you, but I would give my personal investment money to anyone that tells me and show me that I can get an 18% to a 20% return on my money and that’s exactly what this new store profile does for us”

Jim Thorpe

Our core customers continue to live in a recessionary environment

“our core customer continues to live in a recessionary environment and understanding the challenges of our customers and what they face and how it influences their shopping behaviors and attitudes allows Dollar General to serve them better than anyone else. ”

Our customers have some tailwinds, but the headwinds outweigh the tailwinds

“Now it’s true our customers are benefiting from some economic tailwinds. There’s been some minimum-wage increases but that only helps customers who have a minimum-wage job but it could also cost jobs too. Unemployment is coming down. Last month we added 242,000 jobs to the economy but our customers they may be saving a few dollars at the pump with lower gas prices but what you’ll see is these savings really haven’t shown up in their spending. And that’s because we believe our customers face much stronger headwinds in this economy than tailwinds”

Inflation is simply outpacing wage growth

“And one of the biggest challenges that our customers are facing is that inflation is simply outpacing total wages ”

Our customers simply haven’t received the benefit of the economic recovery

“There were no cost of living increases this year and that particularly hurts our SNAP and Social Security recipients especially hard. And healthcare costs and rents continue to rise which also impacts our customers more than higher income households. This has resulted in the majority of Americans living on the bubble of economic uncertainty. 60% of Americans don’t have a savings safety net of $1000 and 20% don’t have a savings account at all. So as you will see, our customers simply haven’t received the benefit of the economic recovery. ”

Households earning less that 52k have seen negative wage growth since the recession

“households earning less than $52,000 have experienced negative wage growth. Now these are our core customers and only households in the top fifth quintile have seen any real income growth since the recession and most of that’s being driven by the top 5% of earners. So you can see that our core customers who were financially strapped before the recession are even worse off today. ”

Our customers need us now more than ever

“our customers need us now more than ever and our everyday low prices that will help them stretch their shrinking budget”