Private Label Buyer

Rexall Helping Dollar General Gain On Drug Chains

September 7, 2012

After another knockout quarterly earnings report, Dollar General CEO Rick Dreilling told analysts on a conference call that the company was taking share gains from drug channels first, grocery channels second, and mass merchandisers third.

And Dreilling said its Rexall private brand health and beauty line was at the heart of the Goodlettsville, Tenn.-based company’s gains in the drug channel.

“We were underpenetrated in HBA, and we made a conscious decision a year ago to go in and expand those categories,” Dreilling told analysts, according to transcripts from Seeking Alpha. “But I think if you look at the power of what we have done with Rexall particularly on the HBA side, that brand recognition. I think we have just elevated the quality of the product at a great price, and it’s coming a little bit from everywhere.”

Dreilling told analysts that the company reached an all-time high in its private label penetration in consumable sales in the quarter, pushing to 24.3 percent. He said dollar sales private label penetration in the quarter was 26 percent.

Other notable items included same-store sales rising 5.1 percent in the second quarter of 2012, with total sales up 10.4 percent. Dreilling also said in his opening remarks that four years ago, 23 percent of customers viewed Dollar General as “not for me quality or image.” Today, he said, that number is down to 7 percent.

“It opens up the potential for Dollar General in a lot of markets, or even trade areas, that we would probably been afraid to go in the past,” he said in response to a question on the stat. “It puts us in a position where we can demand maybe a little higher initial opening store sales when we build a new store, which gives us the ability to go into a little more upscale market than we have dealt with in the past.”