Dollar General Corporation

Good morning. My name is Rob, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Dollar General third quarter 2024 earnings call. Today is Thursday, December 5th, 2024. All lines have been placed on mute to prevent any background noise. This call is being recorded. Instructions for listening to the replay of the call are available in the company's earnings press release issued this morning. Now I'd like to turn the conference over to Mr. Kevin Walker, Vice President of Investor Relations. Kevin, you may begin your conference.

Thank you and good morning, everyone. On the call with me today are Todd Vasos, our CEO, and Kelly Diltz, our CFO. Our earnings release issued today can be found on our website at investor.dollargeneral.com under news and events. Let me caution you that today's comments include forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, such as statements about our financial guidance, strategy, initiatives, plans, goals, priorities, opportunities, expectations or beliefs about future matters, and other statements that are not limited to historical fact. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These factors include, but are not limited to, those identified in our earnings release issued this morning, under risk factors in our 2023 Form 10-K filed on March 25, 2024, and any later filed periodic report, and in the comments that are made on this call. You should not unduly rely on forward-looking statements, which speak only as of today's date. Dollar General disclaims any obligation to update or revise any information discussed in this call unless required by law. At the end of our prepared remarks, we will open the call up for your questions. To allow us to address as many questions as possible in the queue, please limit yourself to one question. Now, it is my pleasure to turn the call over to Todd.

Thank you, Kevin, and welcome to everyone joining our call. We are pleased with our third quarter execution, particularly in light of significant impact of multiple hurricanes in the southeast during the quarter. Before discussing our results, I want to express my appreciation for our team's tremendous efforts to serve our hometown communities following these storms. As an essential retailer and often the most convenient source of products our customers need, our teams work diligently to reopen the stores as soon as we could safely do so in the impacted areas. In addition, we have helped those in need through the donations to the American Red Cross, donating gift cards, and through our own Employee Assistance Foundation. We further embrace the opportunity to help in recovery efforts by donating truckloads of products in these communities. Kelly will discuss the financial impact of these storms on our results later, but importantly, our thoughts remain with those impacted communities, and we will continue to seek opportunities to partner with them in the months ahead. For today's call, I will begin by recapping our Q3 performance. After that, Kelly will share the details of our financial performance as well as our updated financial outlook for fiscal 2024. I will then wrap up the call with an update on our back to basics work before discussing our new same day delivery pilot and our real estate plans for 2025, including Project Elevate. Turning to our third quarter performance. On the top line, while our core customer remains financially constrained, our results came in near the high end of our expectations for the quarter. Specifically, net sales increased 5% to $10.2 billion in Q3, compared to net sales of $9.7 billion in last year's third quarter. Importantly, we continued to grow market share in both dollars and units in highly consumable products sales during the quarter, and also grew market share in non-consumable product sales. Same-store sales increased 1.3% during the quarter and was primarily driven by growth of 1.1% in average transaction amount, including increases in average items per basket and average unit retail price per item. Customer traffic also increased 0.3% during the quarter. The comp sales increase was driven entirely by growth in our consumable category. as customers continued to focus their spending on the items they need most for their families. This growth was partially offset by declines in the home seasonal and apparel categories. From a monthly cadence perspective, same-store sales growth was strongest in October and was positive in all three periods of the quarter. Notably, the last full calendar weeks of both August and September were the weakest of the quarter, suggesting that our customers continue to face significant financial pressure as they are less able to stretch their budgets at the end of the month. While we saw an uptick in pre-hurricane sales in areas forecasted to be impacted, we believe it was largely offset by periods of store closures following the storms. As a result, we believe the net impact of our top line results was immaterial. I mentioned our core customers continue to face significant financial pressure, which is having an impact on their shopping behavior. We see this pressure in the timing of their shopping during the month as well as in the mix of products they're buying. We know that they need value and we are working hard to deliver for them every day. We continue to feel very good about our everyday low price position relative to competitors and other classes of trade. However, the heightened promotional environment persisted throughout the third quarter and we anticipate that it will continue for at least the duration of the year. With that said, we continue to focus on enhancing our unique combination of value and convenience. We believe our results demonstrate that we have made significant progress in our back-to-basics work, which I will discuss in more detail in just a bit. Importantly, as we continue to improve our execution and enhance our value and convenient proposition, we believe over the longer term we can capture even more incremental market share, improve our financial results, and create long-term shareholder value. Before I discuss our plans to achieve these goals, I'll turn the call over to Kelly to share more on the financial details of our third quarter results.