Dollar General Corp.’s second stint as a public company started with a bang.
This story first appeared in the December 11, 2009 issue of WWD. Subscribe Today.
The chain, which raised $446 million by listing on the New York Stock Exchange last month, reversed year-ago losses and turned in third-quarter profits of $75.6 million, or 24 cents a diluted share, on a double-digit sales increase. The retailer tallied losses of $7.3 million, or 2 cents a share, in the same period last year.
The quarterly results were its first since its initial public offering.
In addition to targeting a budget-minded consumer with lower prices, the retailer is trying to boost its fashion profile.
Rick Dreiling, chairman and chief executive officer, told analysts on a conference call Thursday that Dollar General would rebrand its Bobbie Brooks apparel for women and girls and its Open Trails fashions for men and boys.
“We are committed to national brand equivalent strategy for our private brands and have well-defined quality standards,” Dreiling said.
The firm’s increased focus on private-branded goods helped lift gross margin to 30.84 percent of sales from 29.72 percent a year ago.
This fiscal year, Dollar General has opened 386 stores, an average of one every 17 hours. The retailer ended the third quarter with 8,720 stores — it closed 28 — and 61.6 million square feet of selling space, an average of just over 7,000 square feet a store.
The Goodlettsville, Tenn.-based firm has also spruced up its value outposts, adding signage, and expanded cosmetics offerings.
Sales for the three months ended Oct. 30 rose 12.7 percent to $2.93 billion from $2.6 billion as comparable-store sales increased 9.2 percent. Apparel sales gained 2.9 percent to $213.4 million.
For the nine months, net income jumped to $252.2 million, or 79 cents a share as sales advanced 13.1 percent to $8.61 billion. Comps rose 10.3 percent.
Founded in 1939, Dollar General went public in 1968 and was taken private by buyout firm Kohlberg Kravis Roberts & Co. in 2007. The private equity firm continues to own a significant portion of the company’s stock.
Also on Thursday, Costco Wholesale Corp. reported its net income for the first quarter ended Nov. 22 rose 1.1 percent to $266 million from $263 million in the year-ago period. Earnings per diluted share were unchanged at 60 cents, matching consensus estimates.
Revenues rose 5.5 percent to $17.3 billion from $16.4 billion in the first quarter of last year, also in line with estimates. Comparable-store sales advanced 3 percent, with a 13 percent increase for international operations and a 1 percent gain in the U.S.
Costco operates 566 warehouse units, 413 of them in the U.S. and Puerto Rico.
Shares of Dollar General closed Thursday at $23.70, down 30 cents or 1.3 percent, while Costco’s gained 10 cents, or 0.2 percent, to $58.76.