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Dollar General Continues Adding To Private Brand Portfolio

December 12, 2012

Dollar General marked another strong quarter of earnings by looking ahead to adding 150 private brands in Rexall SKUs in 2013, more than doubling the number of private brand SKUs at the dollar store over the past five years.

On a conference call with analysts Tuesday to discuss earnings, Dollar General CEO Rick Dreilling said the company expected to increase its private label penetration to 25 percent by the end of next year. That would be up from a 22 percent share in 2011, according to the PLBuyer Top 35 list. Dollar General ranks 20thamong North American retailers on that list.

“These SKU additions build upon our very successful private brand and proprietary brand programs like Rexall that are margin enhancing,” Dreilling told analysts, according to transcripts of the call from Seeking Alpha. “We expect to exit 2013 with a total of private brand SKUs of nearly 2,300, an increase of about 8 percent, with new product introductions in candy, snacks, food, perishables, paper, home cleaning, and health and beauty aids.”

Among the areas where Dollar General has found success is in its beer and wine rollout. It now offers beer in 4,100 of its 10,371 stores nationwide, with 3,300 of those also selling wine.

“Adding beer and wine to a store has typically added about 100 basis points lift in comp sales to that store,” Dreilling said, according to the Seeking Alpha transcripts. “We are very pleased with our partnership with Gallo, who produces our private brand (Wine Spring Creek), which we are now selling at a rate of over 1,400 cases per week.”

And Dreilling said increased private label products should help expand gross margin in 2013.

“Private brand expansion, innovative and new sourcing strategies, strength optimization, distribution and transportation efficiencies, and our focus on relevant non-consumables should all contribute to gross margin expansion over time,” he said.

Dollar General reported sales rising 10.3 percent in the third quarter from a year earlier. Same-store sales rose 4 percent in the quarter, with adjusted profits up 22 percent and adjusted earnings per share climbing 26 percent in the quarter from a year ago.

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