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Dollar General Q1 profit jumps 36%; on track for 625 new stores and 550 remodels

BY Marianne Wilson

New York — Dollar General Corp. on Monday reported a 36% jump in quarterly profit and raised its expectations for the year as its momentum continued.

Dollar General earned $213.4 million in the fiscal first quarter ended on May 4, up from $157.0 million a year earlier. Sales rose 13% to $3.9 billion. Same-store sales increased 6.7%.

Dollar General is starting off 2012 with strong performance in the first quarter due to excellent same-store sales growth of 6.7%, representing the fifth consecutive quarter of accelerating improvement,” said Rick Dreiling, chairman and CEO. “I believe we are positioned well to invest in the future of our business as we continue to redefine small-box retailing and reinforce Dollar General’s role as America’s general store.”

The company plans to open approximately 625 stores, including 40 Dollar General Market stores in 2012. In addition, it plans to remodel or relocate a total of approximately 550 stores.

Capital expenditures are expected to be in the range of $600 million to $650 million. Approximately 65% of capital spending is for investment in store growth and development, including new stores, remodels, relocations and purchases of existing store locations; approximately 15% is for transportation, distribution and special projects; the remaining 20% is for maintenance capital.

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Retailers using pent-up cash; 58% plan to increase capital spending, with IT No. 1 priority

BY Marianne Wilson

New York— Retail executives have more cash, are adding employees and enjoying stronger revenue, but they remain quite guarded longer term, not seeing a complete economic recovery until 2014 or later, according to the 2012 Retail Outlook Survey by audit, tax, and advisory firm KPMG LLP.

In the recent survey, 77% of retail executives indicate that their companies have significant cash on the balance sheet – up from 72% in KPMG’s 2011 survey – and 56% say their companies’ cash positions have increased from last year.

In addition, 64% say revenues are up from prior year (compared to 47% percent in 2011), and 52% say they have increased the number of U.S. employees. Interestingly, 22% indicate that their company’s headcount has returned to pre-recession levels – compared with just 18% in 2011.

Despite the positive sentiments in the report, caution remains the watchword of the day.

"The retail sector has experienced some positive momentum in the past year, but executive leaders aren’t about to throw caution to the wind," said Mark Larson, KPMG global retail leader. "In this year’s survey, executives have pushed back their estimated timeline for economic recovery to 2014 or later, with concerns that decreased consumer confidence and continued high national unemployment are hindering a full retail recovery."

While waiting for the recovery to take the hold, 58% plan to increase capital spending over the next year. The highest priority investment area is information technology – including data analytics and digital marketing channels – cited by 51% of the executives in the KPMG survey. Other significant areas of investment for retailers are new products or services (43%), geographic expansion (33%), and advertising and marketing (24%).

When asked about digital marketing channels, retail executives in the 2012 KPMG retail survey indicate that online shopping (59%), social media platforms (58%), and email campaigns (49%) are having the most significant impact on their businesses. Additionally, executive indicate that the incorporation of mobile technology is also having a significant impact, specifically mobile shopping (36%), mobile promotions (28%), and mobile payments (21%).

Executives also say that the use of data analytics is playing a larger role in their strategic decision making – including areas such as customer insight, brand and product management, pricing decisions and market expansion.

"With consumer behavior, spending and demographic profiles changing rapidly," Larson said, "a key to success will be investing in technology to harness the vast amount of data that resides in a company. That data can drive the insights that will allow retailers to interact with consumers more effectively and capture more ‘wallet-share.’ It may also reveal information on new markets, new strategies and new operating models that will ultimately generate growth and profitability."

Lack of customer demand, pricing pressures and labor costs were ranked as the most significant barriers to revenue growth, according to the survey. The most significant barriers to profit margins: discounting practices, input costs and decreased sales volumes.

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Kroger adopts gestation-crate-free pork policy

BY CSA STAFF

CINCINNATI — Kroger has joined other food retailers in moving towards a policy of only offering products made from gestation-crate-free pigs. The company announced that it has begun informing suppliers of a new policy statement regarding gestation crates that are used to house pregnant sows.

After conducting its own review and considering the concerns of animal welfare and other experts, it has determined that a gestation-crate-free environment is more humane and that the pork industry should work toward gestation crate-free housing for pregnant sows.

The company is encouraging its suppliers to accelerate this already-occurring transition in the Kroger supply-chain. Kroger also wants customers to know that this is a transition that may take many years.

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