Dollar General, looking beyond the COVID-19 pandemic, asserted that it is in good shape despite tough year-over-year comparisons.
Net income for the quarter was $637 million, or $2.69 per diluted share, versus $787.6 million, or $3.12 per diluted share, in the period a year before.
In the pre-pandemic quarter in 2019, net income was $426.6, or $1.65 per diluted share, while, adjusted for one-time events, net income was $450.7 million, or $1.74 per diluted share, the company indicated.
Dollar General topped a Yahoo Finance-published analyst average diluted earnings per share estimate of $2.57 and beat a $8.59 billion sales estimate.
Comparable sales slipped 4.7% year over year in the quarter, but comps gained 14.1% on a two-year stack basis, according to Dollar General.
Net sales decreased 0.4% to $8.65 billion. The net sales decline was the combination of a decline in same-store sales and the impact of store closures partially offset by positive sales contributions from new stores. The comp slide resulted from softer customer traffic partially offset by an increase in the average transaction amount. Comps in the consumables, seasonal, apparel and home products categories all decreased in the quarter, Dollar General noted.
Operating profit sipped 18.5% to $849.6 million in the quarter year over year, Dollar General pointed out. The 2020 second quarter included $38 million of incremental investments the company made in response to the COVID-19 pandemic including $13 million in frontline employee appreciation bonuses and measures taken to further protect the health and safety of employees and customers.
Todd Vasos, Dollar General CEO, said in a conference call that the second quarter year-over-year decline was at its worst in May with July being the period’s strongest month. He added the third quarter was off to a positive start.
Vasos said Dollar General is pleased with the retention rate of customers the retailer acquired in 2020, which suggests they still are attracted to its value and convenience proposition. Vasos said Dollar General will exit the pandemic with a larger, broader and more engaged customer base than it had on entering, resulting in a stronger foundation from which to grow.
In announcing the second-quarter sales results, Vasos said, “We are pleased with our second-quarter results, and remain grateful to our associates for their dedication to fulfilling our mission of Serving Others. Despite what remains a challenging operating environment, including additional uncertainties brought on by the Delta variant and pressures on the global supply chain, our team has continued to successfully adapt and deliver for our customers.”
In the quarter, he added, ”We made significant progress on many key initiatives, including the completion of our initial rollout of DG Fresh and the opening of our first pOpshelf store-within-a-store concept. In addition, we executed more than 750 real estate projects, including new store openings in our pOpshelf concept and larger footprint Dollar General formats. We remain focused on delivering value and convenience for our customers while driving long-term sustainable growth and value for our shareholders. We feel very good about the underlying strength of the business, and we are excited about our plans for the second half of fiscal 2021.”