Dollar General (DG) 26 May 222022 Q1 Earnings call transcript

Good morning. My name is Robert, and I'll be your conference operator today. At this time, I'd like to welcome everyone to Dollar General's First Quarter 2022 Earnings Call. Today is Thursday, May 26, 2022. All lines have been placed on mute to prevent any background noise. recorded. being is call This Instructions for available this this are replay to the company's the in issued of earnings call listening press morning. release

Mr. of like conference may Strategy. begin I'd turn Donny you to Lau, conference. Now Mr. Lau, Vice Relations Investor to President the and Corporate over the

good you, and Thank morning, everyone.

and me CFO. our with today our call Garratt, Todd the Vasos, Jeff John CEO; On are Owen, our COO;

& on release our be website Events. issued under investor.dollargeneral.com earnings Our found News today at can

from comments about include expectations Private plans, uncertainties are statements today's to statements, guidance, me as Act results Factors later filed our and are XX, and any the risks limited that filed Let to opportunities, to, materially or could subject that those caution include, XXXX, initiatives, in and forward-looking Securities matters the are call. on this periodic cause limited future under comments historical of other These differ issued but on defined in you fact. investments, strategy, our made Form about in actual priorities, in XX-K factors that and our release XXXX goals, XXXX, our statements These Reform this morning not beliefs expectations not identified Litigation March to that report such statements financial projections. in earnings Risk are

questions of we and if up revise only Please our law. You General obligation by forward-looking one or your end the should will question, of on not unless update one today's your necessary. open call discussed information any prepared date. Dollar follow-up as in rely the which limit speak questions. statements, any to this At to required remarks, for unduly disclaims call,

over turn my the to it's Now to Todd. pleasure call

welcome you, to call. joining everyone Donny, our and Thank

I We our with to each commitment their for strong communities unwavering are and customers, to to XXXX, serving our our want thank and associates start pleased other.

comp sales consumable in in categories, combined challenging XXXX. increase This non-consumable growth of decline performance was delivered which where stronger-than-expected of a sales benefit our offset the category, led believe we by Our in results stimulus QX by X.X%. the we was our QX XX.X% of of lap reflects

our we overall make addition, inflation. pleased positions that key sales challenges, was solid focused we exceeded I'm and we execution and can the top financial these chain delivering the headwinds and in-stock pressures on continue and performance expectations our also both through for from to In report operating strategic to drive the cost advancing which improvements team's to in we position, ongoing EPS, line Despite to that strong controlling supply to remain year. rising the global what remainder continued of have while experience initiatives. well results believe our also priorities QX we control us key disciplined

ongoing to in addition, with historical price In our competitors inflation, cost as remain product with position, and about trade, we and believe we of a located we challenging five our continue the economic more through our population, supporting positioned XX% of customers stores XX,XXX combination than miles environment. and continue indexes, ranges. to classes while of are we of more feel price other US within targeted And in especially good value see our line well convenience, about to our relative unique

Dollar of rest strengthen strategic further our differentiating focused competitive General ahead, the operating from the and retail landscape. position, priorities while remain continue initiatives our Looking we as we advancing on to

were stimulus perspective, X.X%. mid-March of the turning year. benefit positive a sales as we year, first to me recap with negative From financial a difficult comp comp a Now, Despite and were for results cadence began $X.X billion increased flat prior in before lapping from lap additional quarter. monthly net sales let sales comparison the in quarterly from X.X% of essentially decrease sales prior some the slight February to

turned the sales from has lap past portion move sales with exceeded XXXX comp expectations. April, the most QX, start we our and of in our initial we positive which strong As to challenging are pleased

result QX expectations as to discuss As more QX for of we as remainder John and outperformance which strong the increasing the detail our our for are a XXXX, start our fiscal sales of outlook year, in well shortly. will

results average which traffic, in by basket sales in quarter size customer inflation. first Our driven growth by mostly included offset decline was largely a

with effort to well as new excited to and wider published note I'm efforts, we our Report, past fourth variety even where good which quarter. provide several on also results product ESG of important customers consumable pleased sales Importantly, refrigerated annual in a years highly recently we deal few we Serving our product frozen in performance were updates emphasis and as category These of for options. provides gains in have and by our market placed the the an are that highlighted Others ongoing categories, targets. with metrics share gains our over an updated

are to on are look customers, ahead. progress proud and Overall, proud our of our team's QX serve employees, forward continued the we the as We journey efforts to environment, we and of results. our move communities we

Our creation. and recent our which long-term us supporting for while positions mission value continued and shareholder have actions, remain in transformed unchanged, years, we this success, believe strategic culture well company

I sectors With I'm convenience in to and most never felt value call attractive have of over John. now to our continues in retail both business continue of turn will the offering unique better about and opportunities the about underlying operate existing to We and new the the and I model, excited and us customers. resonate in ahead one that, beyond. with XXXX

Todd, good everyone. morning, you, Thank and

you all taken its me references and some let fiscal important specifically to few you to through earnings details. per has EPS note the share, noted Todd take refer quarter, all highlights through to of we corresponding that comparisons a all of year-over-year, Now Unless are financial diluted periods refer period. the otherwise,

start profit. with gross will sales, I discussed already Todd As

XXXX, impacted by rate positively a basis in categories. expanded a As we gross QX in increase was growth of significant sales our combined our including net margin reminder, points sales, which in non-consumable by XX% XXX

to markdowns expenses margin as in a chain distribution damages. and higher XXXX, percentage a inventory as LIFO percentage a The significantly sales proportion our while of XXX decrease to profit seen XXXX coming costs Of have QX XX.X%, was points. For provision, QX headwind higher QX, of was to our moderation sales resulting $XX of consumables QX of we greater category, a and basis a in from supply increases note, approximately a higher sales million. gross to decrease compared compared costs, gross from QX were XXXX, attributable primarily of transportation some

significant was SG&A a that in percentage reductions the retail of the depreciation of XX.X%, driven by provision cost was $XX partially storm a These offset inflation increases and of sales addition, than were which and of greater most were of This basis inventory markups. approximately expenses quarter. store In factors resulting greater expected, increase an increase higher percentage was labor, expenses. as in related offset costs, incentive product were compensation These by points. partially LIFO during occupancy sales, million winter as XX a by were and amortization utilities. disaster

$XXX to statement, income decreased for Moving the XX.X% operating down million. profit quarter first the

of a XXX points. As profit a sales, percentage X.X%, decrease of basis operating was

and the for in rate tax XX% to XX.X% quarter year. quarter was the effective Our compares last first

decreased the for quarter to first $X.XX. XX.X% EPS Finally,

the greater flexibility while cash which continue the for significant were increase XX.X% our flow, balance strong financial This a primarily remains $X.X reflects end first provide of overall per of sheet shareholders. store to and mix and to impact products. now returns investing of XX.X% basis. as inflation, Merchandise value and delivering the billion at a of on quarter, Turning product to higher the inventories us cost an well long-term, increase the as

is good well-positioned quality with shape and to of right our Importantly, believe that and the are in balance we of inventory continue the mix products. we

a as new continued as overall totaling and and Todd well-positioned the our in optimism projects and stores, move XX%. operations XXXX, decrease planned related million, forward, improvement of distribution our remodels quarter our million are cash underscoring relocations, levels expect expenditures the and that investments Total initiatives. quarter generated mentioned, we strategic serve we the through capital during customers. included in were Going $XXX flow to $XXX spending for from transportation The to our business we in-stock

we total share payout a our a for dividend stock common million million. cash and the outstanding $XXX $XXX share repurchase X.X quarter, billion. quarterly paid the of for repurchased the common of was million end remaining shares $X.X of During QX, At $X.XX per of authorization

continue serve unchanged. priorities well allocation capital Our and us remain to

expansion high-return opportunities, growth in store new our including is strategic first initiatives. and Our priority investing

EBITDAR. leverage shareholders committed current also investment cash ratio returning approximately and maintaining We managing significant adjusted anticipated debt times all to to credit rating grade repurchases through to three cash a our while quarterly remain to dividends, of and share

arising to our and the outlook Despite ongoing Moving the from business. an inflation in chain, on fiscal confident supply continued in update the pressure for cost we financial XXXX. are uncertainties

As as the same-store following, increasing a of week, benefit X.X%. expect sales we two noted, now net XXXX, approximately the are as and result, an XXrd XX% X% estimated sales points of our XX.X%, outlook sales growth to approximately we Todd approximately including to percentage from for growth and of

to of the includes the remainder billion repurchases XXXX, of approximately for approximately in capital $X.XX estimated $X.X EPS XXrd including XX%, are percentage Share spending points we Additionally, which financial of week. of billion. XX% guidance billion $X.X from an to our four the growth reiterating range benefit of approximately and

updated of reflects updated year, year-to-date line for outlook performance as the expectations. expense Our as remainder our top and expectations current and strong well the sales margin

provide our it Let some now additional to relates as me context outlook.

anticipate terms in than be In to half and both EPS the second cadence, we first sales year to the of half. the continue comp the of quarterly growth stronger

the We a QX be QX share year. in in of partially as also the result QX extra and to increasing lower before our week compared repurchases expect amount, our in QX, fiscal to

now Turning for gross XXXX. margin to

continue initiatives, to our throughout from We DG realizing expect the NCI benefits and year. Fresh including

in which growth has distribution our than product private Offsetting near generally are of significant has we despite expected efficiencies, including anticipated driven other that In the a our an consumables fleet, is in sales pressures and of cost these increase transportation predominantly by drive profit addition, can our benefits continued benefits pressure, sales rate category, term. some in lower outperformance additional as mix gross expansion optimistic been categories.

return to chain With of which continued and expect rollouts. XXXX. we investment are In seasonal rates to product to we addition, costs, we increased further in pre-pandemic initiatives, damages, of headwinds SG&A, expect strategic the pressures, markdowns increased and all to be regards inventory including our cost expected ongoing inflation in as higher expect supply fuel

we the offset than more operating they the profit expect gross will margin aggregate, expect However, XXXX, to initiatives SG&A in continue associated to contribute benefits will as our margin in positively we to from expense.

and Track, XXXX we savings to of these and also a We to savings inflation. offset Serve through program, in believe Fast wage portion pursue expected continue Save efficiencies our including will

Finally, with proud outlook and our to team's we hours labor in incremental the in-stock resulted plans customer of momentum even updated results. enhance overall In to which are service. resilience improvement an targeted our customer strong includes investments including to levels in further greater drive on execution, first sales our our commitment and build summary, experience, to quarter

Jeff. the strong disciplined confident profitable financial how continue priorities always, in healthy that, As our turn store same-store I returns, to we term. cash strong business We will for performance, in consistent, the and of goal strategically model the flow expenses ongoing to With remain we long shareholder manage with and long-term be sales value. investing while new and delivering drive to our call financial growth, over free capital

John. Thanks,

next Let and on strategic you me few priorities minutes to our initiatives. operating the update take

Our first sales driving operating profitable priority growth. is

year, to across the to our of are start we a growth We progress as to off good continue initiatives. make portfolio great

the Let with stores me of available end recent through which take the you highlights. first NCI, more the in at than of initiative quarter. Starting nonconsumables or some was our XX,XXX

gross incremental first in be to seeing post margin margin increase in year with along strong a NCI implementation, improvement and performance meaningful stores We we total on very store pleased their across rate. base, sales the including average our NCI in X.X% are continue with continued sales comp

ongoing on to the track and by chain XXXX from the expect across are of rollout sales in entire end and We margin the realize to NCI benefits nearly complete year. the

which concept, success our pOpshelf with learnings further on to Moving and NCI. builds store our

our differentiated treasure and items a and delivered aims the or hunt vast fun, As $X a of to reminder, with by customers a experience, offering merchandise, exceptional refreshed continually differentiated pOpshelf affordable experience value at through less. in-store engage priced majority

we During XX to of opened the the XX. locations, total pOpshelf new quarter, stores bringing number

our smaller incorporates footprint store-within-a-store we format results. Additionally, be larger end of one stores at total as continue we which with a the pOpshelf a into pleased the of to of QX, store market Dollar had XX concept, General

open nearly as of standalone triple more XX store-within-a-store on total total well a track a store which concepts year, approximately by store-within-store than us count would this of to locations are as concepts, to the pOpshelf bring to We XXX and pOpshelf XX up year-end.

we We and XXXX. $X.X million locations for the for continue differentiated from volumes to X,XXX annualized pleased Overall, initial excited locations unique expect and and per with store goal by stores XX%. very $X margin are be pOpshelf million rate one sales we approximately anticipate about our of year to exceed end between concept, results of and gross this pOpshelf to average are the these

in sales of and DG to to refrigerated Turning with goods, areas. frozen a multi-phase growth shift continued focus now is Fresh, self-distribution along a driving which these on strategic

rollout chain across the cost The XXXX XX and Fresh refrigerated and DG of now frozen very delivering pleased on stores we a of DG savings our in than are product from seeing. we As to initial the XX,XXX facilities. are we with continue be Fresh initial was and to entire to completed the reduce objective reminder, more items

DG goal refrigerated frozen in sales Fresh is of important increase our to categories. Another and

performance the strong product this department. with including enhanced pleased from perishables and offerings our stores are front, on We in performance

a not DG optimize while benefits continue expect we DG our as our extended produce of to associated our and in forward multiyear the over to quarter, potential offered further is expansion ahead, to to end program. than deliver growth we the realize plans produce of X,XXX by our of than to expanding DG this track X,XXX product doors build XX,XXX Fresh expand more path end, our on sales. Notably, And record even that continue the Fresh initial more included time. from than reach more our at produce selection we Looking offering wider to cooler and of of believe the additional end also in rollout, offering stores we stores with to in XXXX. network, leverage To that provides a total stores scale, Fresh, first has cooler

more track QX, cooler base, on to our XX,XXX in during fact, and we XXXX. more across we XX,XXX doors than store doors In added install are cooler than

to still additional Importantly, in result have the the believe made to incremental significant despite DG date with ahead. improvements a returns we have meaningful as we initiative of opportunity we Fresh, drive this years

now available was XXXX. update of our Turning offering. of and up standard total health the nearly offering on track This a X,XXX compared we stores consists expanded than to as to stores to at offering, items of more by which of end feet up XX% more an space selling expand to X,XXX to to and end of XXX our the QX, in on additional are

expansion ultimately access of Looking rural with include and further ahead, of our our increasing products plans goal America. time, care offering in particularly basic services health the health over to

I sourcing, to private pursue opportunities discussed, initiatives associated the sales, the efficiencies in supply reduction. with we just shrink to including and enhance brand gross other margin, to benefits improvements global margin addition In chain gross continue

priority opportunities. second capturing Our is growth

years high-return, XX for real us proven to XXX we Our stores, of first and In a including continues relocations. completed XXX estate served projects, low-risk business. XXX well more estate and core than remodels has real model new strength the be our many quarter,

and real X,XXX plans estate store remain including X,XXX projects For X,XXX to execute XXXX, XXX total, new stores, our remodels in relocations.

high-capacity to feet selection. we for we our NCI, larger and in selling larger formats and a offering approximately about X,XXX wider a our cooler square of X,XXX these customers' many additional stores stores. an a respond in our to desire expect line in produce even With for foot counts, health square as allow As assortment, store expanded queue larger product reminder, format new traditional XXX store, product XXXX broader compared our extended including to space of and beauty be

format. Importantly, this pleased we larger with very continue to the of unit economics be

XX%. these assets range larger open initial are productivity capital, working we is including continue sales generate cost $XXX,XXX, and XX% to the the increased returns to about While to of seeing and in store fixed

Dollar The in with brick-and-mortar the estate XXXX. to are stores excited of store XX and and pOpshelf US in in by our total growth in ahead. stores also Mexico our than end pipeline we included real retailer, Overall, ability more we years our In to about expand General are remains goal our robust, of opening any addition planned new significant capture very growth goal, the internationally. to up our about excited to plans XXXX opportunities

our continue and and customers. Next, further we important convenience to access technology our as digital deploy is footprint initiative, enhance an to to complement leverage which for physical

remain engagement our number digital X QX including look properties, digital to our ended app. expect efforts as this to grow and We across million with further Our mobile monthly users active app around on centered our building we than the more enhance offerings.

about XX,XXX be and to Our continues sales to with strong was delivery base. of the hour with of broadening offering the convenience early stores an levels offering we we strong of or Dollar same-day better-than-expected DoorDash combined available including end value of extend less. customer in the yield to a rates, results, of results, our repurchase partnership the with customer continue General, as QX look incrementality high at in This and pleased trial,

profitability the increasing they services look and of pilot suite of benefit we and unique a to These beyond, of In offering; and the with relevant further poised stores; partners meaningfully grow the offerings leverage net customer number over participating financial we our select include more growing rewards addition, while for specifically and are a establishing of as recently, foundation our pleased offerings, value an Network, stores. digital debit in convenient, our we provide overall which building and Dollar After Most spendwell-branded with are last we provide seeing to the bank buy becoming strategy we in to excited base. footprint General unique experience now, XX% launched of we customers, across proposition our the brand our the our while with a enhance partners, greater customers to few growth are further the empowerment tailored and connecting Overall, our even more business. and customers about over continued is increasingly XXXX provide shopping Media our years, with program in and business frictionless for properties. test brand a program. expand this traffic to customers as financial are for digital card the a ecosystem our later incremental need. financial within pay a additional and want driving services These aim personalized engagement account redemption we consists of

operating and reinforce is leverage as a position third operator. priority Our our to low-cost

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Fast this of example on-shelf approach, increasing include where labor customer further our improving convenience great availability. goals our Our stores, a and initiative Track is enhancing in productivity

stocking phase Track of to has which first case rolltainer optimization, led more The and efficient consisted both pack of Fast our stores. of the

of associates. Track strong was efficiencies for component at our to of greater more in solution, second the rates. driving be continue store pleased than is customers available and QX we Fast also X,XXX with another including customer flexible Self-checkout self-checkout, while and convenient our which adoption provides results, end with checkout The stores

we recently that popularity of the self-checkout. self-checkout success result pilot have entirely a As a stores and launched are of customers, with of

this our customers XXXX. time convenience While the stores, layout needed throughout more these could assist self-checkout further to our serving we in proposition, to this stores if to test believe associates customers. option enabling about plan XXX% to associates even in while will We ultimately dedicate enhance remain available XXX

further Looking to discount to of offering innovative a the leader XX,XXX up by as to end stores our expand position extend the ahead, total an track we retail. we are to in self-checkout small-box on year, look our as of

technology for we these Fast digital phase next increasing in our new also leaders. will and tractors store the and of the of than our strategies, to of compared private inventory QX and associates our management, reduce Moving at our hands forward, putting of at retail XXXX. When data-driven which our consists I believe want Track more efforts greater as workload to emerging drive field includes data which of of combined growing XXX utilization tractors over end leaders. XXX consisted the the tools efficiencies with fleet, end highlight of

As transportation will approximately plan number the significantly to a we reminder, of as in fleet outbound account XX% tractors are expanding year. on expect by more which private of our the our focused we from for of than XXXX, XXXX we double end the fleet

supply growth, of result become competitive we further significant operational an gives structure. it planned believe our cost optimizing this our while As us advantage as private within will increasingly chain, control a fleet own greater our

low-cost Our but the growth to operator. a move to principles business always controlling to underlying quickly be and expenses opportunities, simple, capture are while seeking keep

Our our fourth development, priority inclusion. investing diverse empowerment operating is through teams in and

growing for retailer, advancement. a degree new that full-time and programs employer-paid and for end, XXX% ultimately, continue began To we career all employees. access college to opportunities professional to we offering recently As personal jobs and development create

employees Dollar their several as level education General platform addition training Education programs, to American fully program, in undergraduate Council the of that upon fleet on existing now are at family which earn driver other to ability their training general our programs cost to through These access immediate paid completion have store our journey the development members program. including provides well private credits intended no manager development. as help and learning education all to In on-demand, courses is addition, to them, or and self-paced college further online, initiate

We our career growth. ongoing opportunities advancement turn, development meaningful and wage on provide additional for opportunities innovate for continue to in to teams

the placement promotion or lead associate as by internal rates sales internal robust Our evidenced remains of above at more position. pipeline XX% than

a began in store distribution either their or of XX% our team private center. approximately with careers us Additionally, fleet

levels, our long-term confident thank we with proud talent. in value and applicant the start while our competitive rates, monitor the attract closing, to we to their year. turnover for in to am and the XXX,XXX validating for retain plans great like our pleased We on are and continue want In believe others we belief actions employees We position open the to for of in for year growth, drive than hard we the of right all and serving develop with every am about our and to pleased mission to now closely further continue are taking we shareholders. advantage staffing to work I operator, attracting ahead. opportunity sustainable meaningful that, our our that flow With the retaining market creating we the day, would our to with growing is lines greatest career are and as start team's and unique great I a excited make I our priorities remains competitive our talent. against operating and focus strategic company strong we progress and are initiatives a performance, and more our our a purpose-driven currency fulfilling Overall, questions. and plans

will At with Barclays. you. be from your question Our Karen we proceed [Operator with this question. session. Please Thank Instructions] Short conducting time, comes question-and-answer first

Hey, good thanks very on Congratulations much. a quarter.

Karen. you, Thank

regarding should to risk discretionary to a resilient margin. macro I it to But weaker relates your ask, comp as just general, format and and so I gross macro. So, very in in very weaker in concerned a wanted also think the is investors have outperform been obviously,

view respect mean, lot with provide a a investors more more those terms categories. how or relates guidance if my respect – color margin you're little personal could wondering, was versus with both realize you're on you realize margins. and obviously segments, then I that, comps general gross view Because your of gross to and I specifically resilient how comps people So to it to my thinking about your as – discretionary on is both non, outlook and – in

So any would helpful. be that on color

these, factored that With there. with respect about we with in good to sales, provided of guidance feel both Sure. Karen. the sales I'll take to respect raised obviously very and that's that question,

that We really the over have taken account driven by was consumables. performance into

factored So well. into margin as that's been the

reflected done great orders fantastic about the business, team to job fact we of the minimize have that driven more a by continue So accordingly but markdown And proactively to feel the of the it consumables. has sides is adjusting both risk. the

year the I'll little thing the this give is past they of regard lap on get last it's most other the a way the to lap color to note, a mix year, mark – shape The as just significant most now that sales, has rather but effect non-consumables. the difficult sales, we of the year the with on with also a impact stimulus it's more see difficult both the past because had – disproportionate we on

don't have much expect past and see that, then, we're reflected. you that lap Now all as again, year been that's you're in the throughout strongly positive. while mix consumables, And is isn't past we market significant And the a we improvement obviously, QX. towards a that our the sales throughout continued year relatively, now even

of start. on provide terms you Okay. a strong to And then that? off more could meant, just to April, clarify, XQ Any granularity in I

offering. tough Karen, always say. a wants an is the sides intentional both behaving perspective, have in in to and compelling that both a of fence, low that at done a side our it's work But the I – and bit QX other offer purchases, non-consumables. consumer pretty that remarks, indulgence the done what real we ended happy saying of value goes we've And in on a upbeat how what both from around indicated you, for with first discretionary so with consumables have I have ability she the to that, we and in I and as the QX. that would we're when opening much tell work she the And Yes, NCI few consumables seen are I price. we consumer, my little think Even that non-consumable business. We've that in shopping of weeks is really we and all side times the consumer of still

John So, equation we yes, we move as feel good forward, as the about indicated.

Thank Appreciate you. it. Great.

your Our proceed Lasser Michael next comes UBS. with question. from Please with question

rest Good be -- assumed morning. some down, question. down trade will vein, the who like-for-like rest year? that you to the taking did how the year? much those price lot much facing did my you contribute to Thanks contribute do that the And a increases contribute may how have How incremental or And for customers contribute How in it XQ? stress, quarter? in to contribute of to trading much expect economic much the of

I'll I'll the been for car And buy, put other only fuel you overall seen, has through means. that the that the Thanks the has tell this fairly and Michael. that. to her products she she that to consumer take not we've but in question, has Yes. in hyperinflation resilient

now that's it a now, So difference would about COVID right consumer would is is above what it as well. it, you goes we that gainfully we employed, where I've and holding a and tier one the shop talked long still and as well, shop is I little she's towards and all look really thought COVID, customers of the would up that tell the biggest that makes to mentioned you see start of or slightly bit to she along, start in higher-end call we're shops at as core already to great is I Matter the little just and that gives with attracted fact, I intentionally, running that next confidence we're and And more offer Dollar when at more value consumer. at see we us starting to that since that that be customers customer, retained have our how starting earlier. us General we to thing that spend. The that

So that is of we as well QX year back the pick down probably up starting to move you continue and tells that part to trade as and in steam is things up. through into tighten and that, trade the

but home. to mention keeping gas on only if is the also up, price not normally shop right, is $X.XX to is that What we're mentioned, because next the starting closer closer to and I'll she admit gas average starts cohort would consumer, Lastly, you trade our it, a gallon see to so home, at in that now that $X.XX, prices. let's occur her core

right and changing, those shopping definitely eyes. before are So it we're our seeing patterns happen

for being some they're going to you. further of bit investments at and take morning gap. the your price be competitors that General apologize risk of enjoy the you a success one achieved? to of downer, continue has to to that think your this Thank Dollar And price Do prices down to I making little need that, you'll announced a narrow the maintain and big gap

We've classes the sharpen our through prices months the into now, the before, against half price. I've ranges, whatever tell we opportunity, to to do. plenty many, continue great historical many price never Dollar would our disposable more. about that feel that there's all look of would in bigger need this Yes. out we do continue and right great to, But would some COVID, about year. gives that are our you all I at we really the seeing referring on than spot We one – thing I And you closely. to all is Michael, even competitors competitors the and we and much price, trade you, at of we as our keep positioning. prices our mentioned move look any all. there great has General the that that We've of QX that is, when I that there and the anything in tell and you we've ammunition back believe we right a don't horizon of at see through The over we're got position is watch that of are felt to tell concern us to that what is levers taken better to

very much. you Good Thank luck.

Sure.

your from comes JPMorgan. Boss with question. proceed Matthew Please with question next Our

Thanks. on And congrats another nice quarter.

Thank you.

drivers? momentum I think have the excited on then think the all Todd, help you that of and you're value back that more business the to you're much the about year, to this main to What citing drivers do like so, the pieces So, that year-over-year as a attribute do the initiatives opportunity driver or other of of basis? on still we in-stock us And one think of as key legs? the half most about this topline seems company-specific the the business. convenience, key in is it how really guess, continued you about

topline. for push would drive Matt, initiatives Yes, continue that forward you thanks also tell and the I question. to that our

So, recently, to not to I into talk And but a area have little current only that different one tell driver. if about cohort General. hear propel digital of Fresh, our that continue that, DG started is you well. you But bit that continues would we a It's more continue driving our that digital is to digitally savvy. that cohort topline And be think Dollar will to top that customer, our and of we'll customer that, more more as initiative. is and help about initiative

piece. We the over on this. platform in in moving building last dial that the have months, spent digital six up the earnest, capital years, to many the eight turned really, really And nice some for have

a those about So, others moving big really worried while fundamentals, we're needle on of lot fixing are the forward initiatives.

confidence do one the But pOpshelf business challenged. Fresh, supply may forward you that discretionary lot be So, our And we're up consider well, a course, pOpshelf. is and in chain of upcoming coming NCI That's pOpshelf you about ahead. produce gives continues as and so into non-consumable performing think think still well, of would about months well. we us of DG excited the a to self-distribution then, of in of what the even as very digital. move side climate years

they than value store, gravitating the we've traffic when are definitely they So, of more driving into that into come everybody store and tremendous other loves we're drivers, a through a means and all the amount a to convenience convenience. deal. lot value But these because got

the to the gross if Fresh, these about year maybe in fleet, and build and my the second the larger private half NCI, inning to Great. company-specific And what you've think the you what the margin inning margin. just the of on question, that are that, we And similar about John, picture say benefits DG with from the How for then, think maybe quarter quarter. back would best topline think relative benefits? first seen maybe today to we as

the hang Matt. we've we're I'll question, how on by saying, very gross Sure. of start pleased at just start first margin able we're looking the around I'll Great goodness. been to questions, margin, with part gross to to what do that with

While levels, you we we lapping were were. pre-pandemic points last were about quarter, where still this And X.X point if we're back over we down above one go two expansion points year. of to

impact really the the to of it think I speaks initiatives.

talked pressures are call, pressure about the out. million near-term called some we from $XX supply chain on year-over-year that there certainly, were the We which Now costs, an headwind.

down Now million. QX, from $XXX which that was was

we the course, impact full pronounced of as LIFO other had was before, significant The million thing QX of I year. for on $XX mentioned about that that challenge. the as in booked stimulus. the anticipated again, But inflation provision we we much based lap talked of the mix the we more And

as mix mentioned, I not pressure get basis, year-over-year from away So we as stimulus. a much in forward, saw we we QX expect look as continued on as we

product well fuel We as cost also from costs expect chain, as inflation. supply continued pressure

demand convert double fleet. to and savings. done more We year. other year. well, very second And this part seeing of the customers. in the actions inflation the to The due from in-house it mentioned trailers the expect the anticipate move in we capacity reduction manage cost we've adjust to We're going size initiatives moderation. that particularly the half as the year some cost lap lock in put and the we our to of lapse moderation to drives actions in private improve heavy some We're inventory changing we've the very in as that through third-party to the in However, tractors we last of And as place. year we XX% benefits the ease, pressures, we

as we're And well the as we we on for quarter-to-quarter I as the EPS feel we're as margin, throughout we look ourselves mentioned go at, specific ahead, guidance not really to see we sequentially fourth again, vary, look improve sales gross benefit on So I positioned. reasons you scaling and but giving very from well both early the year expect on impact in we're of inning most mentioned, innings terms in average, third, the probably in in would the margin macro, say gross of we're but these, average, benefit. as initiatives of there. you They

So gross as and as talked over as a very very in in the as mentioned, price. We leverage scale about, place continue a in margins. we've scale other our and position nice we're good is ourselves our we Todd we these time, levers to, enhancing work see

Congrats color. again. Great

you. Thank

with from question question. Simeon your Please next Morgan with Our proceed is Gutman Stanley.

margins. I margin John, have to that a everyone. question. It's incremental on or morning, follow-up Good overall

you think I gross. to spoke

in quarter sequentially better, in margin step-up issued it still year. for sales, rate fourth that So done even look this get the but embedded you when Sales was it's against what the an the guidance you has this in the business incremental the at the have if you above incremental throughout average historically.

not better. accelerating versus that gross that the better? cost three maybe throughout do So you getting some it reconcile of incremental and were that gets the why within the like ago, But I worse, commentary you heard said year? seems months just pressures that And present then how

getting moderation. We we but around see thought, going be and say that move I to are say the inflation. the We still see gradual year. seeing moderation that's through than cost why would worse. more wouldn't EPS as I sequential mentioned cadence margins pressures overall and originally moderation, the we expect No, we improvement the we still is in

there We've of terms of any don't increased that. In see we pressure cost inflation. talked terms about wage SG&A, in

that there. a expected prior we tracking still than where it's pre-pandemic expect wage inflation in be We manageable, to well year, little and growth less more levels, but than

from not targeted continue hours. good step material of momentum the making position in some terms experience, to levels really there. of a also to sales we're customer a We and customer investments specifically but make sure strength driving for mentioned and the labor It's in-stock up

we full the the about guidance inflationary out, has guidance as year So we very called everyone EPS provided, maintaining feel enhanced, pressures. good despite

right a I categories line. done great top job think improving team the ready line and in-stocks those in the be bottom and to the mitigating drive the has to the

-- to happening, to Are your was built? trade built way that And Todd willing quicker into maybe your some you is starting pick was the share that plan? up mentioned you it was steam. -- that there's that happen plan that's Are that seeing down the than tightening

going tighter that consumer knew a you tell to I We would in. it last pressures, bit. Yes. little in of needs the to more was lack on tell I because fuel year. talked just But you get everyday inflation her through I coming about, would stimulus XXXX, other the that has well some was that as the pace of compared built of of that because that quickened as

So back we believe that that half the as time believe that she'll gets she holiday into as flee frame, even I see that. you'll year, to further of the especially value she to moves

well, us So thing we're and the sizes behind we're smaller. unit that That's also she is, The that are mention bit sign really is move a accelerated $X point the a coming prepared seeing getting has we often one true basket, and last she's price that I'll little pushing for more that shows to quicker as also and that. in very is, really starting way little are that. those

we would best. meet, for tell you there because and we'll that's to trying be do her ends that what make that So she's

luck. guys. Good Thanks,

from Heinbockel proceed Guggenheim with with question John Our your question. next Partners. is Please

does Hey, that? Todd, well. lean look the then business How is terms to want have of you and start how What -- with, play the We was do place into playbook a far differently to do right? better it right, you back in playbook? than in extremely that than in maybe and quickly to XXXX XXXX, recession see did

spot, question, still think is serve. a little the in is Yes. of you a cohorts all not piece would that economically, employment very is that. that that And we good much a for the John, tell here. across it's customers and consumer we're different different spot I I only biggest meaning healthy in thanks

than think that's I the big So differences XXXX. one of here XXXX,

would to very yet. watching could, quicken we because the just then seen. that other pace that, which Now we that well inflationary could have But roll the We're that pieces haven’t over? value. But of flight

then Private as during we've do servicing pressure. That's in in that knowing true a those seen leaning as private going sign I that it customer point is a much she's mentioned. to recent there lean-in playbook isn't we're weeks. that times in really because into that acceleration how and from times. price what business So we brand well is feel as reason historical $X to is the the know is important an starting our brand, And that

of how back through and caps, the off-shelf half we Well, do So $X respond? you'll to more brand of private year. then both as the end and displays more see we move QX

know, of you and as nimble, to and more so good you'll really able that. and more we're quickly, So be move see to very

seven of thing to this six, we all of move And I hate years. in is gain different to I because nice through now year. with to so in in oversized I through we've here that XXXX, as amount we, we to XXXX. initiatives would share tremendous a fixing right a that we're the see It's think take an believe, position to of the as believe, the share, last back we're over going important be the be were beyond place half we're far put move so as that the fundamentals we company year. is to the opportunity than going be

the basket of drive you'll that size, terms you very in frequency that And co-purchases them, those maybe see? the buying loyal beauty to Is right, you and you health and items or basket a secondly, it's frequency? when Do But right, the tell. customer? primary are in are will -- maybe you your then look early the at who typically benefit on assortment, too what more people that's seeing, think shop, of think

you that this John, question. is Hey, thank and Jeff, for

about for As this largest certainly donor seeing we've in share we the drug been channel. quite we're from saying time, our health, think is some business the

in before, that's say one reasons here. you've heard as leaning the us so And of why we're

very the excited in year. And we're items, stores so you by being break the when and in certainly X,XXX is of XXX what the we're And be what down in basket. only additional rates, seeing seeing not also And with but X,XXX and we're XX% about response space the good. end we're pleased more really customer's to selling our take

to about about stores that the about it that gives as this theater at has is we we particular best be in way When think more you as that and when and you larger continue about, margins non-consumable. this in mainstays, when So closer think consumable, a foot footprint XX footprint, this paints put cleaning we've share to classify like think before, four, when and talk think closer where to us XX% to will I you home where it way. to grow to And step this really are opportunity square have And think Dollar look you paper for share, our do we're this it the particular about to place. in the General, back of the area full in we said when you X,XXX area. akin us our this XXXX a larger but

the So think into I this you look forward we're the and how why from nature of of corner. and layer see you strategic so but how we intentional our also, business think excited, the we I around see view

you'll more see. see really come what We're think we I about So there. excited to

much. you Thank very

is Oppenheimer. with proceed question Please Rupesh next your from with question. Our Parikh

Good morning. my Thanks taking for questions.

front. on had inflation two I questions the So

are seeing you're of higher are there passing you prices? seeing cost then right you a now perspective? And what now first, are some from -- So any right product the inflation through second, challenges

mix have Todd. and that. little Real seen is We're retail this spectrum. much obviously, quickly, spot Rupesh, different our on than Hi is others broader though what seen we've product a the different

retail than we're pressure That's tell general. would lot that average, you find would number I what one. less So seeing, in cost a on you in

is to been over very on, piece sizes, here different starting and second direction. active trade we down move we've items ability to The saw which we when little inflation off six, months a last have trade eight in the the to

So our ability best we've what do to merch the do got side. we That's that. on

cost, felt retail those able consumer. we've some there, CPG the of we lot I'm to sure But it about make it way, pricing we trade. indexes do value right? as have the Dollar also the that of to we And out all sees that costs push off we General again, to And to because we've to do relates historical to in where my that classes of our when right in are. offer. what a of as We're done haven't levels mentioned we earlier And I consumer costs so we been still some we of additional where cover sorry, of to do and layer better that it put in can knows comment, the compared

that So, I again, on management industry believe we consumer one some to through best probably defray the on we've of to the more the help our pass ability we're in importantly, got pass category to. of which, efforts, the where But on. to need

maybe question. And one Great. just then follow-up

within categories? consumer the impact on anything those your out you've I discretionary categories. seen the Just there, during concerns weather an versus many But potentially behavior did on discretionary curious if of your categories, quarter? any of in changes have the know just expectations differ did some just given

Yes.

As that sure she she a then more earlier, intentional more bit the that what the is the seen to side a bit. little tightening And consumable and I make business, little mentioned of in our more taking side, on is belt of consumer needs a the on that. also We've buys. means our discretionary purchases. little care obviously, becoming where family And

occur thing was over buying been we than thought where I just But lap. the faster we all that to yes, it So, also a well. mentioned, probably is would we that. the it this. saw the because stimulus of saw But We as accelerated as little great going knew team has

on sure able we're prices we making the with we're well as selling adjust, doing quarter that on go the as to important as products quarter already that what discretionary discretionary -- that we and season. So, the to is are third right see yet the the able fourth in and we're get adjust the side as and side, be fourth especially selling to

believe is indicated, a feel the as we trade-offs point consumer and that mix concerned about our we've versus there may we've but all and discretionary non, on also going feel at we So, any that good inventory like real not basis, at land right this on there. John to be markdown made levels seen probably risk where

you. Thank great. Okay,

Sure.

next Kate proceed question Sachs. with your from Goldman Please McShane Our question. is with

taking for Thanks question. our

is over at of the first question how of rest around quarters and just just what the the the was changed benefit, year? SNAP DG projection Our SNAP your couple the for last composition has

the to a have benefit levels. The Plan Yes. pulling states be of been It waivers, out Food continues is while Thrifty And emergency elevated over very pre-pandemic you gradual. some it's still there.

same mixing quite bit still customer well just year, a was it's of gain higher that share serve but with well. the peak there, than middle it so, And doing and at level last very in norm, not continue very them to

about of there Question is expectation traffic. you just when Is positively? inflect can think an that

number And can tell much start better would you was from I that looking a take with was. traffic positive our good on my you our you that, we see. it to opening actually I closed we actually really see QX number, comments, traffic think like QX, what which Yes. in I indicated that, and out can to is as than

we've and believe drive especially to to, environment right products, long price got the term. traffic So we points, John get feel, away lap that further stimulus as initiatives, that we this referred from further that we in

Thank you.

Absolutely.

Our with comes with question Please proceed from final Jefferies. your question. Corey Tarlowe

and Good thank my questions. you taking for Hi. morning

as that are where for an expansion to on Mexico, provide Firstly, to update you relates as can region? into international, on progress it you

Thanks, is Corey. This Jeff.

what opportunity. we short relatively team folks have a So able and joining to the a of accomplish been about period the in in pleased of would really I Mexico, really fantastic team with retailers tell assembled are has time. I'm you, excited

foremost, of the first experience. and the That's impressive with point. is So incredibly first decades team

as Dollar point along confidence the mentioned we The great analogs the continue learning to of we've historically have And performance before, make internationally is, lot us serve progress even customer. great incredibly well from gave here customers and to we've to expand second around a that General. which at is this board, we serve we of how a lot done that

learn about also a more are lot needs what so we United and really her excited tailor as we've able and her So and really on the more what been to here in we rely well to we're about able do States. it that consumer, to offer

what look assortment been here to and very about to we're chain also the fact, real the with the great in that then feel at of we've Feel couple there. doing I and about continue and headed the estate, the shortly real, to real Mexico. weeks be down about of sites convenient progress. what there do ago pleased the down still So And good there supply a build on we're be been XX our the community end And seeing by we of here are in about in we to we're the to initial stores terms in our be year. good up of ability expectation that excited retailer and US going and able feel to serving that

That's And just for great. question then a John. follow-up

levels you then As $X.X the and $X in cash share how it allocation, balancing dividend relates CapEx? to repurchases in close billion capital are thinking about balance to billion the and sheet

priorities. way same of the in still We're about Yes. thinking terms the

priority Then of on it's can mentioned, XX% kind we're where we get initiative a And paying new to you Our that year. on continue billion the amount a competitive to $X.XX allows our first back as strategic so shares. increased the then a the remains business. this generates to kind we're going When and us dividend, to buy getting business positions basis. well, we're first. which you year-over-year target cash, stores which And going quarterly tremendous investing us on in returns of these that's invest returns of

what with we going quite we're with little forms. that historical up doing returns, just So a CapEx with invest cash of shareholders And in to norms. as I bit of a in we're of a percent think really, terms bit to. is to these these inflation. business, investing meaningfully still again, in returning But biggest is kind need meaningfully sales it. of the from amount, It But that piece the

level X% you of back historical to if of of down that out, so, a And our it's sales. kind strip little over that

It's us. the for for working think really very And well well feel we investors. good very So, allocation. I about the working

best Thank and of helpful. much you luck. very Very

Thank you.

level thank this at every ever Well, of more day. high before. you General. for continues for to the which proud thanks in tell, your all for business our interest questions, you a customers I'm and execute than Dollar about team, our I'm can I'm excited sure

in retailer a mature a in the and are few we years. focus as mode, has this discount We our in have growth transformed strategic differentiated us retail company particularly landscape, last

enormous I of you As day. we capitalize a well we growth us. the very to I hope for on result, are you front opportunities listening, you. have positioned Thank great a see in believe Thank and

today's concludes conference. This

you your and thank we time, disconnect may participation. your this You at lines for