Dollar General Reports on End to End Supply Chain Transformation, Digital Transformation, Falls Short on Earnings
Dollar General Corp. released its second-quarter financial results, which fell short of expectations in terms of both earnings and sales. The company also revised its full-year forecast downwards. The retailer notes that customers prioritize affordable everyday necessities over non-essential items.
Like other retailers, Dollar General highlighted the issue of shrink and noted that an uptick in product theft has negatively impacted profits.
“While we are not satisfied with our overall financial results, we made significant progress in the second quarter improving execution in our supply chain and our stores, as well as reducing our inventory growth rate and further strengthening our price position,” said Jeff Owen, CEO, Dollar General. “These actions were an important driver of improving customer traffic trends and growing total market share in the second quarter. In addition, we executed nearly 850 real estate projects during the quarter, further extending our reach and expanding our ability to serve both new and existing customers.”
The retailer has been working to implement a complete end-to-end transformation of its retail operating model, its first in nearly 20 years. They are currently working on a pilot of this model to enhance in-store operations while positioning them as a low-cost operator and plan to release further details on it in the coming months.
Total capital expenditures during the year's first half were $768 million and included new store investments, remodels, and relocations. The remainder of the year will focus on distribution and transportation projects and spending toward strategic initiatives.
The retailer had previously announced plans to launch 1,050 new store openings across the U.S. in 2023, along with their first international stores in Mexico.
Last quarter, the retailer introduced DG Forward, an execution and innovation strategy helping Dollar General drive execution through operating priorities like driving profitable sales growth, capturing growth opportunities, leveraging being a low-cost operator, and investing in diverse teams.
The company will now build on that in four key focus areas, including:
Winning in Rural: With approximately 80% of Dollar Tree stores serving rural communities with less than 20,000 residents, the retailer plans to better provide for these communities by executing new real estate projects, with many new stores outfitted as larger store formats, and increasing product offerings of frozen and refrigerated product as part of their DG Fresh initiative, with further plans to install a total of more than 65,000 cooler doors in 2023.
Extending Their Reach: The retailer is extending its reach within digital properties, seeing an increase of more than 20% in monthly active users compared to last year, and expanding its partnership with DoorDash, which is now available in 15,000 stores and drives significant incremental transactions with customers.
pOpshelf: The three-year-old format provides a smaller-scale shopping experience around non-consumable shopping occasions. During Q2, the retailer opened 26 new pOpshelf locations, giving them 190 locations within 20 states.
DC Well-Being: The health initiative helps expand healthcare goods and services in nearly 6,000 stores. The retailer has plans to expand to more than 7,000 stores by the end of 2023.
The company recently went live with its first distribution center to feature large-scale automation in South Carolina, with the ability to deliver half of the SKUs served from the facility to over 1,000 stores, lowering their cost to operate.
Promotion
Dollar General announced the promotion of Rod West to executive vice president of global supply chain, effective September 1, 2023. West will lead transportation, supply chain modernization, and distribution center operations and most recently served as DG’s senior vice president of distribution.
West joined Dollar General in 2005 and notably served as vice president of perishables growth and development, where he led the creation of DG Fresh.
“Rod is an outstanding leader who will continue driving Dollar General forward through his considerable internal knowledge and experience on our supply chain team,” said Jeff Owen, Dollar General’s chief executive officer. “I am confident his leadership and expertise will further benefit Dollar General’s business, customers, and communities.”
