Dollar General Dials Back Popshelf Expansion; Q1 Sales, Earnings Miss

Dollar General Corp. reported a tough quarter as its core customers cut back on non-essential spending. The discounter also reduced its full-year outlook.  

The macroeconomic environment is more challenging than Dollar General had previously anticipated, which the company believes is having a significant impact on customers.

Dollar General is cutting back on the expansion of its Popshelf format, which is focused mostly on discretionary items, reducing the number of expected new store openings in fiscal 2023 to 990, down from its previous estimate of 1,050. In line with its previous forecast, the company still anticipates 2,000 remodels, and 120 store relocations.

During the quarter, the retailer opened 212 new stores, remodeled 582 stores, and relocated 22 stores.

Dollar General’s net income totaled $514.4 million, or $2.34 per share, for the quarter ended May 5, compared with $552.7 million, or $2.41 per share, in the year-ago quarter. Analysts had expected earnings per share of $2.38.

Revenue rose 6.7% to $9.34 billion, missing estimates of $9.47 billion. Same-store sales rose 1.6%, less than expected. Strength in consumable  was offset by slowdowns in seasonal, home and apparel categories.

Jeff Owen, CEO, Dollar General, said, “We are controlling what we can control and have made significant progress improving our execution on multiple fronts, including on our supply chain recovery efforts and enhancements to the customer experience with our previously announced investment in incremental labor hours.”

The company reduced its guidance for fiscal 2023. It now expects net sales to rise between 3.5% and 5%, down from its previous range of 5.5% to 6%. 

Same-store sales are expected to increase about 1% to 2%, compared to a previous range of 3% to 3.5%. Earnings per share are expected to be in the range of flat to down 8% from the prior year, compared to a previous guidance of up 4% to 6%. 

As of March 3, Goodlettsville, Tenn.-based Dollar General operated 19,147 Dollar General, DG Market, DGX and pOpshelf stores across the United States and Mi Súper Dollar General stores in Mexico. The company is No. 16 on The PG 100, Progressive Grocer’s 2023 list of the top food and consumables retailers in North America.

This article first appeared on the site of sister publication Chain Store Age.