Dive Brief:

• Dollar General posted net sales of $10.2 billion during the fourth quarter of 2022, a figure that was up 17.9% compared with the same period in 2021, the discount retail chain reported Thursday. Comparable-store sales rose 5.7% year-over-year in Q4, while operating profit was up 17.1%.
• CEO Jeff Owen said Dollar General intends to invest about $100 million in its stores during 2023, a sum that will mainly go to boosting worker hours.
• The discounter was disappointed by its results for the last three months of 2022 and expects that its performance will be stronger in the second half of 2023 than during the first six months of the year, President and CFO John Garratt said during an earnings call.

Dive Insight:

Owen said the company’s labor-focused $100 million investment in its stores will “support our expectations regarding consistent store standards while further enhancing the associate and customer experience.”

The investment, he added, “will position us to drive greater on-shelf availability and capture additional market share while amplifying the potential of our initiatives and ensuring our readiness for our growing customer base.”

Dollar General’s announcement that it plans to direct money toward increased staffing levels follows a disclosure by the U.S. Occupational Safety and Health Administration in January that the company was cited repeatedly in recent months for having unsafe working conditions in its stores. The violations included blocking exit routes with merchandise and storing boxes in unstable stacks, according to the agency, which added that it has fined Dollar General more than $15 million since 2017 for “numerous willful, repeat and serious workplace safety violations.”

While Dollar General’s Q4 performance wasn’t as robust as the company had hoped to achieve, the fast-growing retailer nonetheless recorded stronger results during the period than it did for fiscal 2022 as a whole.

Net sales were up 10.6% during the year, which ended Feb. 3, while comparable-store sales rose 4.3% and operating profit grew 3.3%, Dollar General said. The company noted that fiscal 2022 was a week longer than its previous fiscal year — an inconsistency it said was not a factor in its comparable-store sales comparisons but otherwise contributed to the financial metrics it reported.

Dollar General’s comparable-store sales increase in Q4 is mainly attributable to inflation but was held back by a drop in store traffic caused by poor weather in some parts of the country in late December, Owen said during the call. Basket sizes were also down during the quarter, Owen added.

Owen said private label sales played a key role in driving Dollar General’s latest results. Products carrying the retailer’s house brands now account for more than a fifth of the company’s total sales, he said. Dollar General is boosting its private brand assortment across a number of categories, including candy, pet food, over-the-counter health care products and perishables, he said.

Dollar General has seen strong sales of products at the $1 price point. In an illustration of that trend, 30% of the company’s comparable-store sales during Q4 involved products priced at that level, according to Owen.

Owen said Dollar General opened its 19,000th store in Joplin, Missouri, in January, and also recently debuted its first store in Mexico. In addition, the company added nearly 3 million square feet of distribution space during Q4, including a new distribution center in Blair, Nebraska, he said.

Owen also said Dollar General is continuing to step up its emphasis on perishables and produce. The company now delivers perishable products to virtually all of its stores through its DG Fresh self-distribution program and expects to offer fresh produce in more than 5,000 stores by the end of 2023, up from the 3,200 stores where it carried those items as of the end of 2022, said Owen.