DG - Earnings call transcript Q3 2021 | Dollar General Corporation

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Operator

Good morning. My name is Robert, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Dollar General Third Quarter 2021 Earnings Conference Call. Today is Thursday, December 2, 2021. All lines have been placed on mute to prevent any background noise. recorded. being is call This Instructions for available this the 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 your & Corporate over the

Donny Lau

morning you. Good Thank everyone.

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

and on release our be website Events. issued under investor.dollargeneral.com, Earnings Our found News today at could

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

unless disclaims call You General this to obligations any any on of statements forward-looking discussed unduly or in today's should update law. rely not date. by which speak Dollar information as revise required only

under questions. At and of mentioned, remarks, is one one will earnings if call measures which I We measures. open on to prepared to your your this are Please investor.dollargeneral.com will for Reconciliations GAAP most included the reference questions in News our release, the question also comparable morning's up follow-up we financial necessary. Events. limit certain as the end and posted non-GAAP

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

Todd Vasos

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

challenging for associates based thank supply chain what to control. the including we a and continues quarter cost delivering controlling be remain communities pressures their what needs I operating meeting want elevated can to customers, environment, pleased of Despite customers. our are our disruptions, results with for teams the on focused other. third our unwavering And We our to commitment and they’re each broad and

grateful efforts. are We for their

believe current Looking both ahead, well-positioned costs, we’ve And from higher-than-expected supply price we navigate a chain our and product are are we we to the experienced perspective, confident environment. in position. very although

because targeted indexes $X our of a the other ranges. historical our And essentials relative families believe to we depend at and remain on for us will and they to our in presence significant and customers competitors assortment. so classes with line are important at trade for continue right our As products many our have price in point price, the price everyday

assortment our In foster fact, to program $X at continue remains will moving or where approximately of and this XX% less. we appropriate. And overall forward, grow

communities local positions count the in miles, that an the As retailer further to the as for stores operating we end, by XX% distinct the update from our of of differentiating to U.S initiatives X our continued provides share advancing some on strategic position, retail competitive distancing us plans. on XX,XXX in recent discount we landscape. of rest advantage within continue remain located country and our the we excited another population, our more strengthen focused across believe priorities store I’m with of General well success. while and U.S Dollar largest over Overall, and the about To presence

nearly of X,XXX and the X,XXX projects to for nearly our openings, release, count triple of acceleration in to up foundation the lay include next locations. as plans our XX fiscal expect First, execute year, these of year-end as to note, strengthen to you our including estate to 'XX concept, saw store target XXXX, continue as in expect we Of growth. we store future total pOpshelf new our we compared real as a

given which pace the of expectations, of a by further we to about our concept, our continues In openings targeting addition, XXXX. plan we to sustained pOpshelf exceed of X,XXX year-end total pOpshelf new the as ahead, performance accelerate store fiscal move locations

both Importantly, the pOpshelf to opening Dollar brands. as will significant be see to on we growth new annual anticipate these capitalize opportunities incremental further store plans locations our look we we General for

given represents stages We Mexico our to our Mexico, for with will expansion and plans States. outside resonate the convenience we extend our continental We -- U.S unique which confident consumer. store that are United are early and also us proximity and proximately now demographics will represent of Mexican proposition the compelling at footprint Dollar General opportunity first a the to believe the into locations value

additional initial our a we ultimately on plan growth the XXXX, in in stores seize Mexico expect we While number of entry is into today will focused into opportunities piloting small future. [ph] turn to

with performance. with being to of that our are .X% pleased our perspective, on translates in recently with announced, a date our previously digital DoorDash introduced broadening as XX,XXX in which following were quarter, sales lowest enhancing in by to Comp an month QX we sales stack while robust multi prior cadence proposition a X-year with XXXX. October strongest a increased locations, in a reach QX services our new results more let's From expectations. under in the Net declined sales quarter. to top call. September, in to convenience customers. our to report delivery first, further the the provide partnering over Jeff basis. year XX.X% Finally, third increase And XX.X% some recap I'm comp will in X.X% to trending for line the But line sales $X.X detail discuss later of these of updates billion hour increase

year. include growth we last was size year-over-year which size, average by in decline offset a growth average Our third lap sales basket customer even in quarter basket results largely in traffic, as significant

better the be syndicated our pleased retail. frozen belief of strategies retailer a even to growth our attractive slightly mature as we most execution we to gains continue measured share retention the enable And continue customer the future X-year validates in now the will in as And one QX, in XXXX. pursuing new and Overall, as market of acquired a And good we the basis. underlying that pleased supporting with unlock for additional data call customers many highly total our model. creation. decreased operate And during initiatives, growth share third across our share mode, that, the with excited in the saw also gains in consumable as traffic growth, feel market by groundwork XXXX. We refrigerated on improvement Collectively, the ahead. while to business over the turn about an are which in to we categories. results overall are further fronts, we With we about strong opportunities forward. see stack addition, significant We're QX in to lay I'll value sustainable never believe long-term quarter, as John. felt growth of In product the about product we shareholder sales we and right reflect quarter I've move compared opportunities sectors our we

John Garratt

Thank morning, everyone. you, Todd. Good

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

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

non-consumable significant by QX gross profit was in a of a categories. growth sales net impacted our XXXX, As combined increase in positively sales, including reminder, in XX%

of LIFO QX decrease XXXX, as compared increase XXXX. For basis percentage to inventory a profit basis of a This was reduction of transportation driven XXX that compared XXX increase a percentage proportion primarily higher to was shrink as included points a a of also a XX percentage costs. our greater attributable and The disaster expenses by related occupancy the an year but QX sales an expenses XXXX These higher which most retail he damages. sales XX.X%, of was partially and in SG&A Ida. an period, by of increase decrease significant the were sales as offset in as costs, sales. million of category, quarter was markups, gross hurricane were points. store provision, basis from XX.X%, $XX a attributable to factors of QX of greater to points, of increase inventory in a consumables percentage and labor coming were increased sales current

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

to QX with pressure of a As comparison points. And basis a rate, X.X%, we're XX the year pleased operating difficult was very profit decrease on and of sales, improvement our operating compared margin prior points while basis XXX the create unusual percentage XXXX. of

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

of EPS period. XX% for rate which to $X.XX, decreased XX% growth Finally, QX over annual a X-year reflects compound

Turning end sheet quarter, investing remains now the to in-stock the progress while improving and of business. not And our Merchandise inventories shareholders. to and to and the our cash flow, $X.X significant of continue were at balance provide for delivering strong an returns flexibility financial us long-term, billion which the increase third position, X.X% make while our on overall with continue basis. position good overall satisfied and in a consumables we're are a levels, in-stock on decrease of per .X% particularly we our store to focused

teams flow and position the planned quarter, inventory continue and new our from relocations, holiday distribution of the million Capital shopping work are billion. were investments our initiatives. stores strategic year. closely to we delivery through with Year-to-date And pleased ahead, for to the ensure cash included three to for we related Looking generated of operations projects season. for transportation our expenditures our and suppliers significant and quarters the remodels spending the remainder totaling goods $XXX with $X.X first in third

cost million. billion. was quarterly $X.XX common million $XX At quarter, QX, the common of shares Board that our we a of end the We the $XXX repurchased During paid announced by authorization outstanding at a our repurchases stock million. dividend share X.X million of authorization this has total for remaining of $XXX today total and future for increased per $X

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

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

of share remain approximately EBITDA. while We a debt investment leverage also shareholders payments, our repurchases, and to through quarterly to managing ratio in to all significant to anticipated grade adjusted rating Xx credit dividend committed maintaining returning current cash

to fiscal update Moving financial on XXXX. an for outlook our

chain, from We changes COVID-XX our continued guidance, for economic consumer QX. cost the on quarters, which in updating any are reflects ongoing sales uncertainty, operate as of pandemic, time first business. corresponding throughout strong impacts our the and the supply regarding performance our our expectations we three continue in behavior uncertainty pressure through and the to as the inflation, EPS including including a well recovery Despite

the sales Net to XX% X.X%; X% to of following. of to the For basis, approximately in annual approximately a over XX% XXXX, X-year a XX%, of compound EPS which of stack or reflects rate reflects X-year expect we a but to adjusted growth compared sales approximately to in XX% $X.XX of decline to $XX.XX, now X.X%, on XXXX a XX% range the EPS which and same-store X% XX% to period. range approximately growth growth

guidance tax an effective approximately now rate EPS assumes Our of XX%.

real share projects Finally, August stated unchanged from our XXXX. on and repurchases XX, our expectations for in what we capital earnings spending, release remain estate

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

impact of we couple the as COVID-XX payments. the the continued supply additional sales, unemployment arising pandemic, and our including next months outlook from terms disruptions stimulus end given aid remain uncertainties of such chain benefits additional of federal over cautious and certain In the the in of

provision markdown to to LIFO low prior our continue the rate increases, a mix of to we rates of in cost year keep reduction where as year, to a goods rate. markdowns continue XXXX. will result please higher with and abnormally including quarter QX and we quarter, benefited benefit the mix to performance from a an less gross gross compared increase cycle expect as Turning we the from continued due in margin margin, levels on fourth of sales a a mind, margin QX, sales we in favorable prior pressure sell-through Consistent gross in the the cycle favorable and strong higher

to also well elevated be compared to We chain for port services in period. due carriers. by delays higher at the Like transit anticipate other higher and XXXX as supply costs third-party retailers, demand business continues as costs impacted to QX our

the to an initiatives. confident in million, to these these to $XX continue to we pressures. incremental transitory investments we're strategic includes continue With million despite challenges, XXXX. $XX during navigating year-over-year our of million quarters This regards incremental However, made about first three amount ability in and SG&A, expect investments our $XX

to profit and initiatives we expense. and by margin gross DG continue Fresh offset NCI to XXXX, we will aggregate, the expect from expect our in to operating in strategic than However, contribute benefits as positively the SG&A initiatives driven will more margin associated our

from incremental to expense. are not team. updated pleased vaccine potential mandate, does the our are federal the results, disruptions Finally, third or labor guidance including testing business include or any strong the and execution to the any by testament In our impact with and closing, a we quarter performance market, proposed which

As continue in always, how with of and consistent strong financial we disciplined be the expenses we to goal manage performance. capital, delivering

call in long-term healthy Jeff. for our the drive returns, new will to store value. shareholder ongoing sales our flow to investing free strategically profitable and confident business financial While that, With turn model We the growth, long-term. remain cash I over and strong same-store priorities

Jeff Owen

Thank you, John.

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

priority job this a team executing a driving growth first portfolio operating growth. sales great against of Our did profitable quarter robust is The initiatives.

including of stores stores NCI gross nearly some stores complete highlight we the a across comp we with entire be over the to XX,XXX or X.X% in very The with in our performance stores across a non-consumables NCI on rate without rollout our of now NCI store more by than seeing to increase this average sales base. Overall, NCI pleased continue QX stores expand X,XXX along are is year performance NCI. the offering. meaningful we year-end, and we light with as our end margin chain efforts, to by NCI version, total of an Notably, in XX,XXX recent offering total plan me and strong to in contributing our of expect starting compared more improvement incremental at nearly was end XXXX. Let to this available initiative the the offering

treasure our pOpshelf through majority success our or delivered merchandise, at with and on with the items and a fun, value learnings refreshed continually experience our which vast aims pOpshelf and hunt concept, a to affordable to customers Moving differentiated offering further less. engage builds priced NCI. by in-store unique $X experience, exceptional of

opened the During added first XX, bringing and of stores XX total to the New our locations, number X-year within of XX concepts our pOpshelf the we celebrated quarter, store first opening. anniversary pOpshelf the store store

which to locations as XX of XX to General track up by a a stores. total we concept to pOpshelf XXXX, shop one as format within incorporates For have footprint of on remain additional up store a year-end, pOpshelf well Dollar into smaller an store our larger Market

earlier, the we and Importantly, to both be for noted which pleased gross our margin. as very have far expectations exceeded our Todd of continue performance with stores, sales pOpshelf

of our locations average and move to between sales bodes rate be by about anticipate initial the our this XXXX. fact, believe for X,XXX million annualized volumes we we the future expect $X.X year goal year-end locations and million well XX%. as In one We to per store current stores towards these for gross $X for margin exceed pOpshelf

Turning frozen a shift distribution multi to goods. and phase refrigerated DG now of self Fresh, strategic is which to

remains we a to now the Fresh entire to DG completed across as we pleased Fresh primary costs of more product refrigerated continue facilities. from XX Fresh savings to to our reminder, XX,XXX are seeing and items. chain the And rate. contributor stores in of the rollout a DG our As are and The than QX very margin objective reduce with gross frozen be we delivering DG is on initial meaningful

are the DG front. categories. goal to in on performance very is And of these with sales happy Another we Fresh increase this

year in all sales sales other categories against frozen goods even difficult comp comparison. product overall a outperformed of QX, refrigerated our and prior As

forward, high as coolers. cooler track expect realize added cooler which cooler network, DG Going on install expansion and additional quarters, we and approximately to more build from deliver XX,XXX in we doors doors of benefits expect leverage further the than doors continue our growth our store Fresh XX,XXX With associated three our be to multi-year we scale, our of base. selection to to across in product an optimize In XXXX, wider in capacity during we first record cooler regards our sales. will the majority total, additional program, even

approximately update items Turning by space offering, about This year-end. offering. additional expand nearly now feet on more expanded health offering to of which selling and standard at in an consists X,XXX our as with to of our was available XX% stores XXX of XXX compared to to the end stores nearly plans QX

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

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

second recently with first fantastic is We best-in-class we opportunities. work expand significant ability and a Our additional X,XXX relocations. to estate of and store, growth our customers. serve to opening capturing the stores, XX as which milestone completed celebrated new priority Through real the X,XXX three XXX XX,XXX our the we continue of team enhance including projects of our footprint estate total remodels reflects a real quarters, further our

new on remodel estate in remain stores, to we projects relocate stores real stores, representing XXXX, X,XXX total. open and XXX X,XXX For X,XXX track

this offering have now year-end. X,XXX we to of stores, over with stores to produce addition, In approximately a in plans expand by X,XXX total

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

But a store and approximately We in room future foot be we a of time. a expect more also X,XXX accommodate in new expanding approximately new X,XXX to ultimately note, allowing for stores our to stores assortment growth. prototype, larger to XXX XXXX optimal to XX,XXX of square the produce additional this year. plan up Of over total and next stores offering add of to goal

continue the we very store. average to productivity be of continue larger about this above XX% average an pleased square as per to format foot traditional Importantly, sales sales with trend

estate an opening XXXX additional locations, XX bringing the also XXX as total of to number store include additional up well by year-end, store to plans real pOpshelf about pOpshelf within Our stores approximately XXX the concepts. as

with we stores by our open very first to the to Mexico for As Todd XXXX. about expand excited our to internationally time, up year-end XX plans in are footprint noted, also plans

foundation and lay model look is business. we core for our Overall, value low the a while continuing risk a growth long growth. estate our return to more have extend real offering even us. of the still news future we continues to ahead be As new to strength communities, unit convenience proven high of good And to we for believe runway our

our and types, approximately we new alone. across General, opportunities United format fact, available Dollar In in continental DGX there States pOpshelf store potentially are estimate XX,XXX the

unit unlock early of small When are in we expect expect opportunities taken pipeline move we robust, and significant entry remains disproportionate years while store And new we these retailers, as Although to opportunities available to capturing all our are Mexico ultimately will additional still the into continue ahead. box number we a a the excited share together, estate new significant come. our opportunities about real to forward.

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

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

providing including meeting Todd same in combined General the customers example early, customer by levels needs while of our high an our broadening of pleased savings our of with day As convenience offered Dollar of strong results, customer hour repurchase are and evolving And with still DoorDash the or better-than-expected is trial, with noted, partnership by we another base. delivery rates, incrementality sales the a less. initial the of

with on is DG this of brand platform. seeing in Network, our experience. number look is very customer a significant remain to our in partners accretive long-term customers the which Our Media growth better excited we connect also of in including potential Overall, we we launched growth the our results, business. the to about that campaigns XXXX, And way strong

forward, ecosystem. Going of our offerings, providing our and customer digital the driving relevant, meaningful include levels goal of engagement more across personalized even plans with higher

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

and branded our govern to decisions. zero mindset. defined control at We the safe have customer approach, control continues of reinforcing This the which cost process to internally spending approach based center serve all clear do, a our to spending, disciplined we as keeps budgeting to while

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

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

of our and provides The checkout convenient which Track is associates. greater also while second flexible solution, with for component efficiencies driving Fast store self-checkout, customers another

small XXXX ahead, as innovative expanding the to plans in as the our by offering now majority to of and box further our an include of we X,XXX retail. look position stores over Looking end to this leader base year-end discount store by XXXX our extend

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

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

in to serve. growing new communities continue create As a retailer, the jobs we we

plan XXXX, we net than create jobs. more new X,XXX in As evidenced to

increasing of roles short addition, responsibility and a environment our opportunities timeframe. meaningful to and have In relatively growth advance employees with growth fosters where an to wage levels

position teams. over we above were associate placed. innovate we internally XX% development associates or on lead opportunities fact, In the of sales to our the our store continue at And offer

opportunity the our we as robust and currency company attracting a traditional a advantage start talent. retaining to our believe staffing unique a with and by evidenced develop store continue efforts in yield results believe promotion flows, career driven these positive and purpose levels. our applicant greatest above competitive to growing and base, remains Importantly, We pipeline, and healthy is across

once I came employees important also for where the our again inspired people. and We generosity completed of recently raise campaign And our of was together funds giving our compassion causes. a by to variety annual community

their Dollar operating creation. part against closing, are plans have and Our serving growth confident progress incredible initiatives General, and an multiyear place, and culture the the sustainable is deeply drive great strategic in long-term and daily And embedded others actions in initiatives. making such so proud to in are with a of am of we value our I be mission priorities team. we we shareholder to In

we busy As hard truly of like we want offer of for unique dedication serving are I in of my XXX,XXX open that midst the others. and more operator, and thanks the the holiday than now our mission employees season, across a sincere each to to the questions. would our their fulfilling work company to lines With to for

Operator

first from with proceed Instructions] Simeon Gutman question. your Our Please comes [Operator Stanley. with Morgan question

Simeon Gutman

Good low the everyone. first on consumer. like the My income put morning. I'd question, to Hi, spotlight

the you customer rolling about stance? side, you grow. we're stimulus to jobs talk be and Can stronger year. any to lapping on stimulus starting next off, first the half wages your And have in that you weaker? is Are We seeing going of massive getting the other signs have or

Todd Vasos

be It's pretty shape. Yes, tell to I Simeon. hi, in continues you good would core consumer our that Todd.

thing a or continue the And of to doubt employed, money You're may gainfully in gainfully that probably core But we dissipated. biggest XXX% this remainder said with is the and customer we'll good to and great employed. gainfully that talked to low as our there cost And I've spend. so she classes next, that has of to confidence long have when not as we ever look we prepared at her right important her how always continue the your as believe always as we lot that's our as driver from on price against operate, with then other trade. believe to be this right to about look to move said as she hours as may day. all employed But want show as right, remarks, can away no year, now to. point. money now that forward. we not we is stimulus continue about is believe through Not of spend. and tells point, we consumer each as and that a And pricing it, $X has of think We the is we're the she work And she to walking is value, our us every that that, she'll many you

think that to and value core with message resonate our I consumer. convenience continue will So

Simeon Gutman

maybe the fourth more going near-term to that quarter Thanks. financial pretty It quarter is where of And transitioning years EBIT margin to was the ago. question. a below implies X fourth it be

by nicely up ago, even XX was year-to-date, you're versus bps. years though think I and Even about well. X QX as

So besides the discrete model typical you conservatism in else, investments? to speak we anything can or the way expense incremental

Todd Vasos

out unusually with And a But remain to would elevated goods we nature, in is expect And then clearance at that continued to to and look noted. million, vendors gross in as on the the and of you along that's have well and chain, We're other we QX, to just really we sales investments. of then No, lapping we extremely associated And X-year around that QX X-year margin, difficult saw items, demand obviously, point lap year-over-year LIFO other the as is the piece margin transitory would the anticipate in I key prices markdowns sell very terms thing low of into nothing basis. high terms passed overall. seeing as just $XX point basis, QX. on I big of higher in certainly initiatives, non-consumable which We from high pressure pointed $XX noted extremely incremental believe to which as which provision, just accretive we're a supply issue. a showing that's on higher million up investments the strategic we then the which the are a it's But we supply increase again, we that given as went again, have inflation. the that's drivers, last a year. here from we

Simeon Gutman

Happy Take holidays. Okay. Thanks, luck. care. Good everyone.

Todd Vasos

Thank you.

Operator

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

Matthew Boss

Great, nice thanks. quarter. on congrats a And

Todd Vasos

Thank you.

Matthew Boss

the of the Todd, in XX.X% year the stack quarter. high-end So, full guidance implies comp fourth your

on I and XXX for the consumer? as business? in confidence fourth so November? from this drivers Any value this on Or Just points more based convenience, quarter cost think quarter. behind living improvement that's your than of you rising Is any recent basis reacceleration the the you've core of is seen color face what in far? in third cited the

Todd Vasos

Thanks Matt. Hey, the for Matt. question,

still tell As range that put I rate. we But is see left. a out definitely you you would we quarter consumer there's shopping of know, a lot right, the at and pretty good a

So there let's about our that looking that that us enjoy ability just the what any the the then trade term numbers is still great down Dollar through came or And very also in better is those during to trade benefits. on and consumer. that never make year that probably into sure on for. lastly, to that in as trade positive continue gives those expectation our consumer we down, the But a will if And in, ball it. that off retention exceed move are continue on that rate. taken next bit. confidence to consumer this on And to consumer a we come pandemic that tends is temper And we eye is we've our service General thing for

So we've in and quarter next year as well. fourth through got the that the moving

got the lot a other we guidance that But nice of that quarter that's attainable. why give range. left all you and on side, of high-end is we've very the with So

Matthew Boss

X% comp, high-end use perfect exiting the for and same X-year X% a I translates my the guide a If your basically of fourth Right. I math to to think second stack pre-pandemic It's XX/X, again follow-up X-year that's quarter, X-year double the average. year that in your question.

to I think X.X. X around was it

Is Is is down question market this acquisition? these customer guess, of beyond? to this the you about we about your consumer? is ability hold So do new next trade some gains best and think think year gains? share I as this how being

John Garratt

John and right. This your You're is right, Matt.

growing into of two stacks, the the to it you the to other a last and And As growth baskets pre-pandemic larger you look significant at the the top customers new Todd implied And levels. really I'd versus brand. point is came of point mentioned, piece on the year. is X-year baskets, basket things our outperformance would mentioned I that retention

fuller I these the for of the Dollar The initiatives. have providing strategic increased a both enabled are think by in General so fill baskets. really of relevance bigger strategic trip really And initiatives

what can new more you well your do of services as I of non-consumable to shop I these as further the think the purchase and on consumer. of key shop, your customers. bring enhance that unique of value to really more appeal initiatives and And the outperformance. broader convenience grocery as the You can see the That's combination that also side, drivers do home highlight we the

Matthew Boss

Right. luck. Best of

Operator

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

Michael Lasser

a reverse Thanks much question. stacks to in than those market comps behind take difficult that you be are do share lot order your do share -- what for trailing market you some your to are more need is? this stack my morning. multiyear ceding year. other retailers, Why taking might you actions Good trends? And that others that Recognizing multi stack suggesting X-year think

Todd Vasos

stacks market share a And we've are looking you as the stack Todd. accelerated same -- that where because is the I as we pretty been frankly, Fresh, with key customer, now a it this that resonates basis. along pick of that not our on mind, cost. where would like confident at difficult as labs of our initiative We're not it this will all bases only if the into and be convenient beyond we move outpace up that categories, that across many has know, that happy at we our market you in on XXXX And market but rate, have. year has at on and some Michael, this to X-year of forward customer are right our share continue thought all right, we're value message some would keep quite X-year will we initiatives core way share. in all we Yes, but been preserved with been basis, and different go tell

be it change look I've that good over over tame. And promotional to as to years. either good, was as environment pretty don't quarters as out, we see Our few as the we been last has continue in not, pricing the continues if few and seen last

manner we together, 'XX. that market as all donors the that really gains a to same to positive into put trade, classes we you in with move when feel real share move So our continue being of will those continue

Michael Lasser

of 'XX, Understood. And piece you of that the speaking a you typically were to the helpful provide formula and target. algorithm

your X% that's XXXX? stimulus line algorithm? of X% with you. another of expect in Thank the that out the there, off you with year, returning For of uncertainties long-term your comp to element same-store growth other before next X% below Or roll along to typical part X% expect you given the be year sales to some would to in would

John Garratt

great say you, This think to question. year, in XXXX We'll well as is the we that model. do the that is, felt never call. business on the John, prepared I We the about guidance. said real early the Michael. including comments, the about about it's initiatives, the feel of would Hi, and I'll formats new sales. boost you performance next specific we've as provide our What better take as I'll as further next estate, the fundamentals tell But

the well-positioned value as then when we're noted, cadence be think think bring general, lap think initiatives we come Certainly, for year, would year consumers And stimulus. again, next about half, need pressures. of next As point I as particular, with year, very difficult and we QX it think inflationary a with tailwinds elevated the the as you it's tough into I you a the also, you lap. in they and the most. and year convenience to, But about to and that'll in in the first you about with headwinds difficult,

demand that said, will there's it But And through this the QX well We tailwind. out gate moderate and will elevated cost have, over reasons time, to into to as think product we the so chain be move that that right QX, continue through will here. the supply calculation as pressures. we is in supply and think a costs expectations drop magically year do could flip as a of the they you as and

latter but fantastic. But the more year, fundamentals more about will part next you the of are pressured than as you come beginning year. I think of would be the the specifics, on the the So to tell year

Michael Lasser

and very a good holiday. have you much, Thank

Todd Vasos

Thank you.

Operator

with Our is Barclays. from Short next proceed with question Please Karen your question.

Karen Short

Thanks very much. I EBIT want differently. question little the to a growth try

for So is implied XXXX. that XQ versus

range a out if in you there. your So of maybe of LIFO on XX% of kind color X% the more up to basically with even to growth little XQ, had XQ, I just a Because XX% range back XQ, charge, quarter. XX%, a up EBIT depending

this chain -- is picture XQ LIFO versus And So then passing versus increases. I bigger cost a on much an for supply maybe question. on is had of not this expectation

Todd Vasos

that, take I'll Karen.

done remain remains pandemic that's expect to sales elevated. mean, supply As Certainly certainly very a guidance. of good evolve, The creates, key to you year-to-date in doing that our well. of have left. based in mitigating wide, to both. and to projections costs. And inflationary lot there's uncertainties I there's a at the chain as delivering crew think, with the we've thought But specifically and operating on what supply costs along It's it provision it's could of is vendors. range us I keep well But terms of also we as we in to job that a of that and do we a of continues pressure. half as narrowing obviously year believe unknowns to well, the And some chain peers, the our margin we is a top think terms that our passed at team, as LIFO as pressures it dynamic the elevated certainly of unclear remain quite to that's by look year-to-date prudent change it's in taking pretty done elevated going But going environment. in year, full look although compared expansion. the earnings as half What QX, we

of transitory volatile near-term. in it's nature, we pressures, inflationary but could reflective still So in again, the those be which really key are believe

Karen Short

could guess And give any little need chain the your color you a or the much I just then maybe gears on what stores work? and maybe unit point country, will asked you domestically. that, out, you makes why growth in I the Okay. another Mexico, to there's where -- Do it And attractive, opportunity, color I guess. fact really the supply market more as context go switching I will on how guess first into opportunity maybe of be so also another to

Todd Vasos

that, really opportunity. about We're Todd. excited is This the Karen. Hi, potential

well in you on United ball of And As -- eye won't pretty here do the we have off we a opportunity stated, States. right -- it's the continental our don't lot take that.

that squarely seeing committed, changed, store are and/or that. a in has Dollar continental XX,XXX between United the are to pOpshelf We put opportunities States focused General, and hasn't on

country, a you couple going there's of as think complex at XX a more into I you an the bit as know, into state intriguing your example. little one, another look pieces, as Mexico, it's than going Number things.

a though many more so up to down of thought, now start opportunities kind us And pretty because the the to feel year ago, put stores do everything want We this here. aggressive. So the we're Mexico, thinking, our will intent till right working And to years wait take started got right. years. was not move to locations Mexico. down it take it need year, it this indicated, that, that fairly cultivate faster. we've on initiative. thing many start why that and even We in is it'll road next many with sure out as And over don't to for we on working to to well now, many we we years XX and takes with many here, But to build do methodically was

will, feels right. So where Mexico Well, definitely northern we if that you home, will start? we closer to will start

up we're some it'll more need that. open at Mexico mass. So a continue go. distribution then will talk as to it'll about as be centers that before But we And lot probably as critical quite area. we look in more not we you all tuned, ready of stay distribution in wise, imagine, start putting to But you can opportunities different

we've well. We've a team in of incorporated, been country on as speak we got using board as plan has Mexico. that the lot will, term The folks great the already. working job, of a you we're if done that So

Mexico. and hiring now to able we're transact So in

continental doing it And could like and what how to what important. move tell probably I starting to you looks in just and States. as locations we're that other in at think real forward that's with tuned. assortment a build We're now out the right and for continue excited, my to grow the This that's to us very stay continue voice. look Dollar United opportunity General and than brand is we different

Karen Short

helpful. holiday, everyone. Great. much. really great a Have was Thanks That so

Operator

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

Kate McShane

for our Thanks Hi, good question. morning. taking

news? weeks, wondering, I first better traffic you comments that in you question in thoughts on it was something And it that few traffic. quarter? but know change mentioned Our just down. given the still got We're that? sequentially prepared your throughout last was on have seen the in the the better any latest variant Is meaningful

Todd Vasos

money, you be QX. continues its as to core traffic seen to our she always less continue pretty And more soft. from has is so is than this think times strong I spend better QX it this was has to throughout. to in more. for the -- tends bit continue been that, important what's little We've good to often and to keep Yes, look basket continue consumer, about you Todd. number you a be Yes, and sequentially she come mind, to our would when tell are when her, definitely it But

not always that sure happy we'll price tend And and on positive, baskets pick driving see less, to the mantra. both big economically and and for switch, the up. to that's better well traffic to it. start our are customer that and make love more we're for so sure those we'd they core traffic smaller to often is see things tends that And overall, you'll not because on what -- and to squarely or progress, reasons convenience happens if squarely we focused traffic understand core definitely switch, spend to seen. grow as so drivers that we'll number We're continue come times consumer. And as intact make our with in she's her. continue And focused and but then our We're then things then those with that of

Kate McShane

ask And Okay, on one to just I want question pOpshelf. thank you.

several times You succeeding mentioned its expectations. had

are stronger-than-expected. wondering is And given majority that We this categories if selling just certain have the what the what quarter look you're been of merchandise there for concept, were like discretionary?

Jeff Owen

very, This Thanks, groundwork very very going excited about that the XXXX, excited the to XXXX. pOpshelf. box, laying in Kate. pleased you're be And responding right, we we and is Jeff. our continue and we're And X,XXX to triple to are by with stores really the entire for customers count store

towards the So she's herself got the now certainly now, in ways you a She's area, right XX% has news gravitating about than bullish than it, are we've lot love shopping really our what When around can just I environment. majority the great about. to is many of our tell less she you responding of we've talk general, ways. you in the telling about that frankly, would she and she's seeing in we think toys store that we think time over finding finding there's and that us. offered, you items treat home the $X. can and really have customer tell And, areas there's by more our well. think When with what excited I excitement, quite is But the are how we fun

just that great. is, it's we excited move forward. continues, we're the started really is Dollar really, traditional complement performing team to how we'll the But now, so going General really And here, concept right and about getting better. better get And and network as we're better

Kate McShane

you. Thank

Operator

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

Rupesh Parikh

concept. for taking I my Thanks also morning. the on questions a Good few had question. pOpshelf

look that years? curious secondly, you you think at how the guys pOpshelf impact if your the concept, first, how algorithm? So then longer look that about at term just in-store coming acceleration, And as in you the does pOpshelf

John Garratt

the of Rupesh. part I'll question, take first that

add X,XXX and XX,XXX end Dollar thing as opportunities this the his General noted top DG as And stores we opportunities. tripling many comments we note I plans. of banner look from our this at the on prepared as a of look XXXX. to Todd on think is additive over in we important banner to pOpshelf, this to XXX it's it next store touched incremental we X,XXX number we've other see XX growth as additional accelerating and time, to that have the then the rapidly, see, as of effectively year We're by

at want on think long-term at forward, is at DG So it think And way specific as year, of additive, that is going important I to that look you we it's But don't going stores. of to guidance any the next the I X,XXX note point. you this the the top that's additive give forward. look as XXX algorithm

is do and $X in scale million stores, that fully the to level about XX% near-term costs the sales benefits. near-term, it. accretive margins at offset unit be million economics these you While just over look we've we fantastic you But have the long-term It's when expect talked and unit startup and to level we as of these, that $X.X to fantastic increasingly operating we growing that economics anticipate time. see profit

Todd Vasos

obviously mentioned. This very will I pOpshelf, within what Like Rupesh excited you we're about very store new that here about concept seeing And is store talk well. we're here. the the as

is within when General is about market. assortment, you stores store seeing And about a months, XX% the right customer. able to this and the pleased store XX% the Dollar we're from concept, what of few it think but very what in been inside Just takes with to this again pOpshelf really do it

store, us network. But so theatre assortment here, And forward again, store we larger expand this recently But talked bring opportunity that about a like think which broader to that. give the General a long-term will as to things earlier with to we've we you create merchandise format, perhaps as store continue as the look into the about of we enough foot within to that Dollar square some of pleased mentioned -- that productivity. be the announced

just to for refine that ways this and team long-term But we to as begin. to forward. we'll So see from pOpshelf look NCI a how continue at can store the learned within genesis store continuing it the to learn have look from was is wait like we we and and really

our more to come, grow the to and but ability that store within So pleased over concept time. store with very a

Rupesh Parikh

you. thank Great,

Operator

question Our proceed Please comes Lejuez question. next from with with Citi. your Paul

Paul Lejuez

Can spread Any closes on in throughout follow-up And Hey, next the you kind when are that trade tend rollout. pOpshelf. get? about one quantification, talk Thanks. then just your lift think second, about country? to Is thanks, Curious see the year's might of geographic drugstore concentrated that store going of guys. nearby DG as a what openings any be to area. you about you more a

Todd Vasos

Todd. that. Yes, take this is I'll

with consumers drugstore to we've you and has health health over share And business think many the the we biggest vocal donor that. from very gain beauty, drug more about the about our continue more share been If years business, general. been of our around and in initiatives,

marketplace, it out goes an imagine you us And can in so give area. the share more when garner as opportunity does in any competitor, to that

on areas to that share drugstores if out focused many multiple anytime, across exist, and the them. squarely have Our competitors any And competitors. in will, spreads you tend that we're in gaining opportunity. just But normally

Atlantic pOpshelf in we're on United to that a you those watch type general. continue on capitalize we're Early call now to Carolinas, But areas to now. that great right believe on. on we this think continue where question, health look, on to Atlantic focused the very, focused Virginia continue the southern and are Southeast opportunity. Mid degree beauty time overall really it we'll see the carefully. we're being, very to across that So is we'll we the an into mid in if about But position over as then States to area And to down just Midwest we're right

always how we're But Dollar need with is warehousing be integrated We limited warehouses our to up we're goods do, thing set So to sure is The rollout. we able in about make we very areas. we've General. to and the our important. won't want geographical this certain with timely, great that we methodical as supply

So the the mother of that years all about, we as the about John ship, areas the General so this as brand, costs we only talk could Dollar but of mother talked strip many where use very, very back ship, the in different pOpshelf over in as we we distribution, out not grow house the make brand. and we the accretive

Paul Lejuez

luck. Good you. Thank

Operator

question comes Bank. next from Katai Deutsche with your question. The Krisztina with Please proceed

Krisztina Katai

versus and it stores that morning, I also, guess, And the urban relates your then patterns take Hi, there wondering in start notable some any you performance implied the I to question. stack the you were do rural taking reacceleration, point the with good to where for to pointing thanks as in a quarter. to greatest out fourth anything stores the back potential just opportunity market to was X-year of or of if could share? quarter, see

Jeff Owen

to rural, earlier that degree better our all, in to of continue are part. perform first distributed from This first balance the where of saw not about pandemic. the of that's pandemic, terms about the take Jeff. we geographic beautiful And the company pleased of in but stores. same has is outsize in we the see is beginning a company it how When sales the the geographic. did one about performance you standpoint we we talk it's performing And this real normalize footprint in with things but you our across where -- all And I'll stores, rural, just early disparity well the when performed how and think evenly is performance. rural traditionally the to our in

up, all expect across our seeing open we're would So of performance as up base. store we open things like just

pleased across So performance speaking, our generally really demographic with the and regions the all of very we're regions. geographic

seeing So pleased real what we're there. with

Todd Vasos

into come into question, anticipate as other things, that from a the 'XX we same lap start indicated, QX, were out the 'XX 'XX, move to as early. to the 'XX, those out, still the that as as yes, second big probably And John market we and we in believe level will -- of there get prior as on start to still XXXX pretty the areas we of gains continue stimulus swing the we things with things mid part and pandemic. end But pandemic got to in in into back share level

trade, when of initiatives all you And being almost one the that earlier, larger think share as time. of it's drug classes so but I about And indicated it, donors definitely against of accelerate, over the again, health as and and years health such our around that will initiatives services change. won't to continue in we general believe beauty our and will come. probably We continue and in

So we're now But nicely and note feel squarely up QX right lined share gains. about on we for being on high a market good XXXX. moving focused ending into

Krisztina Katai

you Thank great. color holidays. and happy for the That's

Todd Vasos

you. Thank

Operator

turn call reached to Todd back over for comments. closing to Vasos We've now end session. I'd the question-and-answer the of the like

Todd Vasos

speaks in by evolving execution our your for in saying think a Thank with you I'll even Dollar General. things very third up which for great all environment. questions the the our culture interest and the wrap to constantly strategy, we're pleased and by team thanks our quarter I results,

very forward, internationally to look pace first robust expand I'm As time. and for the of initiatives, including we announcements our growth new of optimistic set unit the at about accelerate today's pOpshelf

As model. that very was a well-positioned business years us. I in never great underlying I on better to we than opportunities much see is have a the you And in earlier, felt said front Have believe for company listening. holiday. we I happy and fact, a are of the about and ago, growth Thank day it few this capitalize enormous a different just

Operator

concludes This today's conference.

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

Dollar General (DG) 2 Dec 212021 Q3 Earnings call transcript