Dollar General Corporation

Good morning. My name is Rob, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Dollar General first quarter 2026 earnings call. Today is Tuesday, June 2nd, 2026. 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 Bezos, our CEO, and Donnie Lau, our CFO. After our prepared remarks, we'll open the call up for your questions, and Emily Taylor, our Chief Operating Officer, will join us for the Q&A session. To allow us to address as many questions as possible in the queue, please limit yourself to one question. 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, long-term financial framework, 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 2025 Form 10-K filed on March 20, 2026, 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. Now, it is my pleasure to turn the call over to Todd.

Thank you, Kevin, and welcome to everyone joining our call. I want to begin by thanking our teams and our stores, distribution centers, private fleet, and store support center for their continued commitment and dedication to serving our customers. Overall, we're pleased with our first quarter performance, particularly our EPS result, which exceeded our expectations as strong operating margin expansion more than offset the impact of severe weather and higher fuel costs. For today's call, I'll start by recapping highlights from our first quarter performance. Donnie will then walk through our financial results and outlook, and I'll close with an update on our strategic growth pillars. Turning to our first quarter performance, net sales for the quarter increased 3.4% to $10.8 billion. compared to net sales of $10.4 billion in last year's first quarter. We grew market share in both dollars and units in highly consumable product sales once again during the quarter, in addition to growing market share in non-consumable product sales. Importantly, in an environment where customers are feeling more pressure on their household budgets, we believe this market share growth reflects the essential role Dollar General serves, particularly in small town communities across America. Same store sales increased 2% during the quarter, primarily driven by customer traffic growth of 1.4% and supported by average basket growth of a half a point. Notably, this marks the fourth consecutive quarter of growth in customer traffic as our combination of value and convenience continues to resonate with customers. In addition, all four merchandising categories delivered positive comp sales for the fifth consecutive quarter, with growth rate in non-consumables once again outpacing consumables. From a monthly cadence perspective, all three periods of the quarters were positive, led by March, which includes a benefit from the Easter holiday shift. And while winter storm activity, including periods of temporary store closures, negatively impacted results during the first two weeks of the quarter in February, we were pleased with our sales performance across the balance of the quarter. Looking ahead, we are confident about our plans to drive continued growth in sales and customer traffic. Moving to an update on our core customer. While there are a variety of puts and takes on customer budgets during Q1, our core customer continues to be financially constrained. as any benefit from tax benefits was largely offset by higher fuel prices and reductions in SNAP benefit payment. Importantly, while there has been a significant reduction in overall SNAP dollars distributed in 2026, we grew share of wallet with SNAP customers during Q1, further demonstrating the strength and relevance of our value propositions. notably during the quarter many of our core customers reporting cutting back on other household expenses including food purchases due to rising gas prices this pressure has been more pronounced on customers in rural communities as they work to minimize trip distance and make trade-offs in their search for everyday affordability and value and with our expansive real estate footprint of more than 21,000 stores located within five miles of 75% of the U.S. population, as well as our growing delivery presence, we are uniquely positioned to serve these customers as they further prioritize value and convenience. From a value perspective, we continue to be pleased with our pricing position, which is within three or four percentage points of mass retailers, as well as our extensive offering of more than 2,000 items across the store at or below the $1 price point. As part of our overall approach to this price point, we continue to emphasize and strengthen our Value Valley offering, which is comprised of more than 500 rotating items, all at $1. Of note, this offering once again outperformed the chain average in Q1 with a comp sales increase of 18.4%. driven by broad-based performance across many sections and exceptional performance in health and beauty. Beyond our Value Valley program, we also introduced several new $1 private label items during the quarter, as well as a new frozen section, which now features a full door dedicated to new frozen items at the $1 price point. We believe this price point continues to be important to our customers, and are excited about the opportunity to continue providing tremendous value through these offerings. In addition, we are seeing customer penetration growth across low-, middle-, and high-income segments as customers across all income cohorts seek value at increasing rates. Notably, across these cohorts, the largest increase in customer count came from the highest income segment. which earns more than $100,000 annually, contributing to a significant increase in trade-in customer households during the quarter. We know that value and convenience are always important to our customers, but even more so right now. And as America's neighborhood general store, we are well positioned to help customers across all income levels save time and money every day. Overall, Our consistent and balanced top-line performance with both new and existing customers further underscores our belief that Dollar General is a trusted partner in the communities we call home, with significant opportunity for ongoing growth. In summary, we are pleased with the start of the year and proud of our team's execution. We are committed to serving our customers while driving profitable sales growth and capturing growth opportunities. With that, let me now turn the call over to Donnie.