Dollar General Corporation (NYSE:DG) Q3 2023 Earnings Call Transcript

Operator: Our next question is from Paul Lejuez with Citi.

Paul Lejuez : Curious on the storage capacity and supply chain inefficiencies. If there was a sales impact during the quarter as well as the cost impact that you talked about. Maybe if you could frame that, also, same question, if you expect there to be a sales impact in 4Q? And related to that, was the pressure any region in particular where you saw the cost and/or sales impact? And how much of a differential was there in terms of the performance of that region versus your others?

Jeffery Owen: Yes. Thanks. I’ll tell you, as we said before, the delays of our temporary storage facilities, certainly, that unexpected delay did impact the quarter from a profitability standpoint. But again, I reiterate how pleased we were with the strong sales performance we saw. And the nice thing is like it normally is at DG, it’s pretty broad-based. And so I think, again, that goes to the consistency of our ability to serve a customer across, not only a broad swath of the United States, but also around the income levels I mentioned earlier. And we’re very pleased and excited that our temporary storage facilities are now online. We’re also excited that our 2 new permanent regional hubs that are going to serve us extremely well.

As we look to the future, they’re also online. And of course, those things will take some time to get fully productive and to allow us to catch-up. So again, I would also mention we’re pleased that we had in stock improvement year-over-year in Q3. So again, when you kind of bundle it all together, I think the team did a nice job of overcoming some of these challenges, to deliver for the customer, go where she wants us to go. I think that translated into our strong comp, our strong market share gains in both consumables and non-consumables and a second consecutive quarter of sequential traffic increases. So again, feel pleased about the top line and feel pleased about where we have opened up our capacity. And finally, I’ll just mention, as you look forward over the next 18 months, bringing on 4 permanent facilities, that will increase our capacity by 20%.

And is something we factored into our strategic plan and feel great about how that’s going to serve us well and allow us to continue to grow this business in the years ahead.

Operator: Our last question will be from Rupesh Parikh with Oppenheimer.

Rupesh Parikh : So just going back to your commentary on shrink. I was curious if you can provide more color in terms of what’s driving the higher shrink lately opportunities you guys see to reduce that going forward? If there’s any way to quantify how you think about the headwind for Q4 or even what you saw in Q3?