Dive Brief:

• Dollar General saw sales increase 17.3% on a year-over-year basis during the third quarter, to $8.2 billion, the discount retailer reported Thursday. Comparable store sales rose 12.2%, while operating profit rose 57.3%, to $773.1 million.
• The company continued to make progress with its initiative to bring distribution of frozen and refrigerated items in-house. That project, known as DG Fresh, remains Dollar General’s top gross margin contributor, CEO Todd Vasos said during an earnings call Thursday.
• Like other retailers that sell food, Dollar General has continued to report booming financial results and is working to improve efficiencies and keep consumer spending elevated long-term.

Dive Insight:

Dollar General remains heavily in growth mode as it sets its sights on 2021. The retailer is on track to open 1,000 new stores and renovate 1,670 locations in 2020, and plans to add 1,050 stores to its fleet and update an additional 1,750 locations during the coming year, Chief Operating Officer Jeff Owen said during the earnings call. 

Fresh produce holds a prominent spot on Dollar General’s agenda as the retailer looks to drive growth. More than 1,000 Dollar General locations carried produce as of the end of Q3, an increase of 140 during the period, which ended Oct. 30, Owen said. In 2021, Dollar General expects to bring produce to 600 additional stores, according to Owen.

Dollar General is also making rapid progress in its quest to bring DG Fresh to all of its locations, and expects that the initiative could help it add produce to the assortment at more stores going forward.

The company was distributing products to 13,000 of its 16,979 locations from eight facilities as Q3 came to a close, and intends to push the number of stores it reaches through DG Fresh to 14,000 stores by the end of 2020, when it expects to have two additional distribution centers on line, Vasos said. All Dollar General stores should be part of the company’s self-run distribution network by some point in 2021.

Dollar General recently broke ground on its first new distribution center that will carry perishables as well as dry goods, and expects the facility to be in operation in early 2022, Owen said.

The discount chain has also been aggressively building its in-store pickup operations and now offers the service to customers in nearly 17,000 locations, compared to more than 2,500 locations at the end of Q2. In addition, self-checkout stations are now in place at 900 Dollar General stores, and the company expects to add the equipment to an unspecified number of stores going forward, according to Vasos.

“By leading our channel in digital tools and experiences, we believe we are well positioned to drive more in-store traffic, grow basket size and offer even greater convenience to new and existing customers,” Vasos said.

Vason also said Dollar General, which announced in November that it intended to distribute an additional $50 million to frontline employees in the fourth quarter, is prepared to continue providing its workers with further compensation boosts.

“We'll continue to watch that, and we will continue to keep them safe through this pandemic, until a vaccine is widely available,” Vasos said, referring to the company’s workforce. "And if we do need to pay additional bonuses to reward our frontline workers for taking care of the customers then we'll do that."