The paragraph provides an introduction to the Dollar General Corporation's Fourth Quarter 2024 earnings call, held on March 13, 2025, and hosted by Kevin Walker, Vice President of Investor Relations. It acknowledges the presence of CEO Todd Vasos and CFO Kelly Dilts on the call. The paragraph warns that the discussion will include forward-looking statements that are subject to risks and uncertainties, as outlined in the company's recent filings. It advises listeners not to overly rely on these statements, noting that Dollar General is not obligated to update or revise them unless legally required. The call will conclude with a Q&A session.

The paragraph is from a business call, where Todd Vasos of Dollar General Corporation discusses the company's fourth-quarter performance and their strategic initiatives moving forward. He highlights that Q4 net sales increased by 4.5%, reaching $10.3 billion, compared to $9.9 billion the previous year. This success marks the first time the company has achieved annual sales exceeding $40 billion. Vasos attributes this milestone to the company's "back-to-basics" approach and the dedication of their associates across various operations. The call will continue with financial details from Kelly Dilts and a focus on future performance drivers.

The paragraph discusses the company's growth in market share for consumable and non-consumable products during the fourth quarter, with a 1.2% increase in same-store sales driven by a 2.3% rise in average transaction amounts. Despite a 1.1% decline in customer traffic due to financial pressures and strong prior-year comparisons, sales growth was supported by consumable products, while seasonal home and apparel categories declined. Monthly sales were positive, especially in December and January. The company notes customers are struggling financially due to inflation and anticipates continued economic challenges in 2025, emphasizing their commitment to providing value and convenience. They feel confident about their competitive pricing and ability to handle potential tariff impacts on certain products.

The paragraph discusses the company's efforts to mitigate financial challenges and strengthen its business foundation for future growth. It highlights a review of the Dollar General Corporation and Pop Shelf real estate portfolios, resulting in the closure of 96 underperforming Dollar General stores, primarily in urban locations, to optimize resource allocation. Additionally, after evaluating their Pop Shelf locations, the company plans to close 51 stores based on financial and operational performance, with 6 being converted to Dollar General stores, leaving 180 Pop Shelf stores remaining.

The paragraph discusses the financial impact of impairment charges related to Pop Shelf Go Forward stores on Q4 results, specifically a $232 million hit to operating profit and a $0.81 decrease in EPS. Despite this, the company remains optimistic about Pop Shelf in 2025, citing positive customer feedback and plans to boost sales through new initiatives, including brand partnerships and an enhanced store experience. Early results from a new store layout focusing on toys, party, candy, and beauty categories have shown a double-digit sales increase. The company also intends to apply lessons from Pop Shelf to Dollar General stores to strengthen their offerings. While store closures are not preferred, this review is seen as beneficial for the company's foundation. Additionally, the paragraph mentions leadership changes, congratulating Steve Deckard and Tracy Hermann on their new roles.

The paragraph discusses the leadership changes and financial performance at Dollar General Corporation. The company is focusing on expanding its footprint, process improvement, and enhancing its corporate strategy. Tracy's experience makes her suitable for leading store operations, with an emphasis on operational excellence. The company is proud of its progress in driving sales growth and shareholder value. Kelly Dilts then provides details on the Q4 financials, noting a slight decrease in gross profit percentage due to increased markdowns, inventory damages, and distribution costs, though these were partially offset by lower shrink and higher inventory markups. Shrink mitigation efforts led to a significant improvement.

In the first quarter, improvements in shrink are expected to continue throughout 2025. SG&A expenses rose to 26.5% of sales due to fourth quarter impairment charges and increased costs in various areas, offset by lower professional fees. Fourth-quarter operating profit dropped by 49% to $294 million due to charges from the portfolio review, while net interest expense decreased. The effective tax rate also fell to 16.2% due to lower earnings before taxes. EPS decreased by 52.5% to $0.87, impacted by charges from the portfolio review. Merchandise inventories decreased by 4% to $6.7 billion by year-end, with notable reductions per store, thanks to effective inventory management.

In 2024, the business saw a 25% increase in operational cash flows, amounting to $3 billion, due to improved working capital management. Capital expenditures totaled $1.3 billion, focused on store expansions, remodels, relocations, and strategic initiatives. A total of $130 million was returned to shareholders through dividends. The company aims to strengthen its business foundation, projecting 2025 net sales growth of 3.4% to 4.4%, same-store sales growth of 1.2% to 2.2%, and EPS between $5.10 and $5.80, with expected capital spending between $1.3 billion and $1.4 billion. The priority remains on business investments and high-return growth opportunities.

The company plans to initiate approximately 4,885 real estate projects in 2025, including opening 575 new stores in the United States and up to 15 in Mexico, along with several remodeling projects. They're investing in technology upgrades, emphasizing a new enterprise resource planning system. They aim to return cash to shareholders through dividends, with a recent approval of a $0.59 per share dividend, although no stock repurchases are planned for this year. Despite a leverage ratio above their target, they aim to improve debt metrics to maintain an investment-grade credit rating. For 2025, they expect continued economic pressure on core customers and anticipate a positive impact on gross margin from improved shrink results. Actions are being taken to reduce controllable expenses, although they anticipate deleveraging at current sales and expense levels.

The paragraph discusses the financial pressures expected in 2025, including retail wage rate inflation, increased incentive compensation, and depreciation due to previous capital spending. The first half of 2025 will face additional pressure from expenses related to real estate remodels, especially Project Elevate, with most projects expected to complete by Q3. Labor expenses will also rise in Q1 compared to 2024. Despite these challenges, the company sees 2025 as positioning them well for future growth, with a focus on sustainable long-term shareholder value as they plan for 2026 and beyond.

The company has updated its financial framework for the next three to five years, aiming for annual net sales growth of 3.5% to 4% starting in 2025, with two new unit growths. By 2026, it targets same-store sales growth of 2% to 3%, assuming stable customer financial conditions. Operating margin expansion is expected to begin in 2026, aiming for 6% to 7% by 2028, driven by several initiatives including the DG Media Network and non-consumable merchandising. These efforts could expand gross margins by 150 basis points, return shrink levels to pre-pandemic figures for an 80 basis point gain, and improve damages for a 40 basis point benefit.

The paragraph outlines Dollar General Corporation's strategic plans to enhance profitability and efficiency over the next five years by reducing SG&A expenses through simplification and optimization efforts. They aim to allocate capital effectively, targeting annual capital expenditures at 3% of sales and plan to resume share repurchases by 2026. The company seeks to achieve an annual EPS growth of at least 10% starting in 2026. The long-term strategy focuses on sustainable growth, enhancing customer value, and delivering shareholder returns. Todd Vasos emphasizes ongoing initiatives aimed at improving in-store experiences as part of their strategic priorities.

The paragraph outlines the company's efforts to enhance customer convenience by improving in-store experiences through staff retraining, simplifying operations, and optimizing inventory processes. Initiatives include reducing friction points, optimizing distribution, and rolling out new point of sale systems. Additionally, "Project Elevate" aims to boost profitability and sales in mature stores by implementing incremental remodels to enhance performance and reduce future maintenance costs.

The paragraph outlines multiple initiatives the company is undertaking to enhance its stores and digital presence. Project Renovate focuses on full remodels, impacting 20% of stores annually, while Project Elevate targets mature stores for incremental improvements to boost profitability and reduce maintenance costs. The physical updates aim to refresh 80% of the store space and enhance merchandising. Additionally, there is a strong emphasis on digital expansion, with growing engagement in mobile apps, websites, delivery services, and partnerships, such as with DoorDash in over 16,000 stores. These efforts are designed to improve customer experiences, elevate the brand, and boost financial performance.

The company plans to expand its channel-exclusive partnership by increasing the number of stores involved by 2025. They recently began processing SNAP and EBT transactions, which they believe will attract new customers and boost sales. Additionally, they are launching a home delivery service that began testing in September, partnering with DoorDash for execution across 400 stores. Initial responses have been positive, with larger purchase sizes compared to in-store shopping. The company aims to expand this delivery service to 10,000 stores by the end of 2025, leveraging their extensive real estate to provide fast delivery options and improve customer access to value and convenience. Marketing efforts will focus on increasing awareness of this service. Furthermore, their DG Media Network will support personalized customer experiences and better ad spend returns for partners, with plans to expand this network alongside the delivery service in 2025.

The paragraph outlines a strategy to enhance customer loyalty and increase market share by focusing on non-consumable growth within a digital platform. The company aims to boost non-consumable sales, including home, seasonal, and apparel, which reached over $7 billion in 2024, by shifting the sales mix to reduce reliance on consumables, currently at 82%. They plan to increase the non-consumable mix by at least 100 basis points by 2027, aiming for non-consumables to constitute about 20% of sales over five years. To achieve this, the company has identified four growth pillars: forming brand partnerships, enhancing the treasure hunt shopping experience, and optimizing home category space to offer more productive and relevant products.

The final strategy for Dollar General Corporation is to boost productivity in non-consumable categories by introducing new programs and innovations in both core and non-core spaces. The company aims to capture more market share and achieve financial growth with a multi-faceted marketing approach that highlights product variety and value. The leadership is confident in their strong business model and long-term growth potential, while also working on enhancing in-store experiences by simplifying operations and emphasizing fast and friendly customer service. Todd Vasos then continues to highlight important initiatives to improve overall store performance and customer satisfaction.

The paragraph outlines the company's efforts to improve operations and customer experience through various initiatives. They are optimizing assortment and allocation to reduce shrinkage and damage, enhancing distribution processes, and rolling out a new point of sale system to streamline checkout. Additionally, they introduced Project Elevate, which focuses on incremental remodels for mature stores to improve profitability and reduce future repair costs. This initiative targets a 3-5% increase in first-year sales for the remodeled stores. Combined with Project Renovate, these efforts aim to enhance 20% of the store base annually, improving the shopping experience, brand image, and overall financial performance. The company reports strong performance in the fourth quarter with solid execution and sales results.

In the paragraph, the speaker reflects on Dollar General Corporation's strong performance in the fourth quarter and throughout the year, attributing success to a focus on fundamentals and thanking associates for their dedication. Highlights include a 4.5% increase in net sales in Q4, reaching $10.3 billion, and surpassing $40 billion in annual sales for the first time. The company achieved market share growth in both consumable and non-consumable product sales, underlining Dollar General's role as a vital and convenient neighborhood store in over 20,000 communities. The speaker also mentions future financial guidance and key initiatives that will drive performance in 2025 and beyond.

During the quarter, same-store sales grew by 1.2%, driven by a 2.3% increase in average transaction amounts, but were offset by a 1.1% decline in customer traffic due to financial pressures and the previous year's strong traffic. The growth was fueled by the consumable category, while the seasonal home and apparel category saw declines. December and January showed stronger sales growth than November. Customers reported worsening financial conditions due to inflation, focusing spending on essentials. As 2025 begins, no macroeconomic improvements are anticipated for core consumers, so the company remains committed to providing value and convenience. They feel confident in their competitive low pricing and plan to mitigate any tariff impacts as they did in 2018 and 2019.

The paragraph discusses Dollar General Corporation's efforts to strengthen its business foundation and optimize its real estate portfolio amid challenging economic conditions. After a review, the company decided to close 96 Dollar General stores, mainly in urban areas, to better allocate resources. Additionally, after assessing the Pop Shelf stores, 51 were identified for closure, with plans to convert six into Dollar General stores, leaving 180 Pop Shelf locations. The store closures aim to improve financial performance and operational efficiency.

The paragraph discusses the financial impact of impairment charges related to Pop Shelf stores on Dollar General's Q4 results, which showed a $232 million negative impact on operating profit. Despite this, the company remains optimistic about the Pop Shelf brand's potential in 2025, citing positive customer feedback and initiatives to enhance sales through new partnerships, store layouts, and expanded categories. The new layout has already led to a double-digit sales increase. The company aims to leverage insights from Pop Shelf to enhance non-consumable categories in Dollar General stores. The paragraph concludes with a note on recent leadership changes, acknowledging Steve Deckard and Tracy Hermann's new roles within the organization.

The paragraph discusses the leadership changes and strategic focus at Dollar General Corporation, highlighting Tracy's appointment as the leader for store operations due to her experience and commitment to excellence. The company aims to enhance the in-store experience and drive profitable growth. The paragraph then transitions to a financial update from Kelly Dilts, emphasizing Q4 results. It notes a decrease in gross profit margin due to increased markdowns, inventory damages, and distribution costs, with a shift towards consumable sales. However, these were partly offset by improved shrink mitigation efforts, leading to a 68 basis point improvement year-over-year.

In the first quarter, shrink improvement is expected to continue through 2025. SG&A expenses increased to 26.5% of sales, largely due to $214 million in impairment charges from a portfolio review and other higher expenses, although there was a decrease in professional fees. Operating profit for the fourth quarter dropped by 49% to $294 million, affected by portfolio review charges, and decreased as a percentage of sales. Net interest expense fell to $66 million from $77 million the previous year. The effective tax rate was 16.2%, lower than last year's 20%, due to specific rate-impacting items. EPS fell by 52.5% to $0.87, influenced by the portfolio review charges. Inventory at year-end was $6.7 billion, down 4% from the previous year, reflecting positive operational efforts.

In 2024, the business achieved a 25% increase in cash flow from operations to $3 billion, driven by better working capital management. Total capital expenditures were $1.3 billion, focused on new stores, remodels, relocations, and strategic projects. The company returned $130 million to shareholders through a quarterly dividend. Looking ahead to 2025, the company plans to continue investing in growth, expecting net sales growth of 3.4%-4.4%, same-store sales growth of 1.2%-2.2%, and EPS of $5.10 to $5.80. The capital spending is projected between $1.3 billion and $1.4 billion, prioritizing business investment and expansion.

The paragraph outlines a company's plans for 2025, highlighting approximately 4,885 real estate projects, including new store openings and remodels. Additionally, the company is investing in technology projects, such as a new enterprise resource planning system. Their capital allocation priorities include paying a quarterly dividend of $0.59 per share, but they do not plan to repurchase common stock this year. The company is aiming to improve its debt metrics to support its investment-grade credit ratings, which are BBB and BAA2. The outlook for 2025 considers economic pressure on their core customers, with expectations of positive shrink results boosting gross margins. However, they anticipate deleveraging due to current sales and operating expense levels despite efforts to reduce controllable expenses.

The paragraph discusses the financial pressures faced by the company, including retail wage rate inflation and a return to normalized incentive compensation, which are expected to pose significant headwinds. Additional challenges come from depreciation and amortization due to previous high capital spending. In 2025, the company anticipates increased expenses in the first half due to real estate projects and remodels under Project Elevate, along with higher labor expenses compared to 2024. Most real estate projects are planned to be completed by the end of Q3 to benefit from increased operating weeks. Despite short-term financial pressures, the company aims for future growth and sustainable long-term shareholder value, with a focus on achieving medium and long-term financial goals.

The paragraph outlines the updated medium and long-term financial framework for a company over the next three to five years. Key targets include annual net sales growth of 3.5% to 4% starting in 2025, with new unit growth and same-store sales growth of 2% to 3% beginning in 2026. The operating margin is expected to expand starting in 2026, aiming for a range of 6% to 7% by 2028. This will be driven by improvements in gross margins and selling, general, and administrative expenses, with initiatives such as the DG Media Network and non-consumable merchandising. The company also aims to return to pre-pandemic shrink levels and reduce damages, with potential benefits of 150, 80, and 40 basis points, respectively.

The paragraph outlines Dollar General Corporation's strategic plans to enhance profitability by reducing SG&A expenses through efficiency initiatives, optimizing capital expenditure, and stabilizing depreciation. They aim to allocate about 3% of sales to annual capital expenditures and resume share repurchases by 2026. The company targets at least 10% annual EPS growth from 2026. Overall, Dollar General aims to sustain growth and create long-term shareholder value while investing in growth initiatives and improving in-store experiences. Todd Vasos expresses confidence in these plans, emphasizing both near-term and long-term strategic initiatives.

The paragraph outlines the company's focus on improving the customer experience by retraining staff for better service and simplifying store operations to enhance speed and friendliness. This includes optimizing inventory and distribution processes to reduce shrinkage and damage, and rolling out next-generation point of sale systems to streamline in-store transactions. Furthermore, the company is launching "Project Elevate" to remodel mature stores for increased profitability and reduced future maintenance costs. The goal is to achieve a 3% to 5% sales increase in these stores while managing expenses.

The paragraph outlines Dollar General Corporation's recent initiatives, including physical asset refreshes and merchandising optimization, impacting about 80% of their stores. Their "Project Renovate" aims to remodel approximately 20% of their store base annually to enhance shopping experiences and drive financial growth. Reflecting on a successful fourth quarter and positive annual results, attributed to a back-to-basics strategy, the company is well-positioned for 2025. Their Q4 net sales increased by 4.5% to $10.3 billion, leading to over $40 billion in sales for 2024—the first in the company's history. They expressed gratitude to their associates and outlined the focus of an upcoming call, which includes discussing Q4 highlights, financial performance, guidance for 2025, and long-term initiatives.

Dollar General Corporation continues to serve as a vital neighborhood general store in over 20,000 U.S. communities, focusing on value and convenience for its customers. In the fourth quarter, the company saw a 1.2% increase in same-store sales, driven by a 2.3% rise in average transaction amount, despite a 1.1% decline in customer traffic due to financial pressures on consumers. Growth came from consumable products, although it was partially offset by declines in seasonal home and apparel sales. Monthly sales growth was consistent, with December and January outperforming November. Many customers report financial struggles due to inflation, with some having to forgo basic essentials. As they anticipate challenging economic conditions in 2025, Dollar General remains committed to delivering value and maintaining competitive pricing.

The paragraph discusses the company's strategy to mitigate the impact of announced tariffs in 2025, drawing on past experiences from 2018 and 2019, where retail price increases were sometimes necessary. The company is monitoring economic challenges, including changes to government programs, to continue delivering value to its customers. It has conducted a review of its operations to strengthen future growth, leading to the decision to close 96 Dollar General stores, primarily in urban areas, due to operational challenges. Additionally, a review of the Pop Shelf locations identified 51 stores for closure based on financial and operational evaluations.

The company plans to convert six Pop Shelf stores to Dollar General locations and close 45 others, leaving 180 Pop Shelf stores. This has led to a $232 million negative impact on operating profit for Q4. Despite this, the company is optimistic about improving Pop Shelf sales in 2025 through initiatives focusing on new partnerships, an enhanced in-store experience, and expansion in categories like toys, party supplies, candy, and beauty. Initial results from a new store layout show promising sales growth. The company aims to apply these successes to its Dollar General stores to enhance non-consumable offerings and strengthen overall business for the future.

In the paragraph, the speaker congratulates Steve Deckard and Tracy Hermann on their new leadership roles at Dollar General Corporation, highlighting Steve's strategic leadership and focus on expansion and Tracy's experience and commitment to operational excellence. The paragraph further discusses the company's progress towards driving profitable sales growth and shareholder value. Kelly Dilts then provides an overview of the company's Q4 financial results, noting a slight decrease in gross profit percentage due to markdowns, inventory damages, and distribution costs, offset by improvements in shrink and inventory markups. The shrink mitigation efforts led to a notable improvement in shrink by 68 basis points year-over-year.

The paragraph reports financial results, noting improved inventory management and ongoing shrink improvements expected to continue through 2025. SG&A expenses rose due to a $214 million charge from a portfolio review, higher retail labor costs, and other expenses, while professional fees decreased. Fourth-quarter operating profit fell 49% to $294 million, significantly impacted by the portfolio review charges. Operating profit as a percentage of sales dropped to 2.9%. Net interest expense decreased to $66 million, and the effective tax rate was 16.2%. EPS declined 52.5% to $0.87, largely due to portfolio review charges. Merchandise inventories at year-end were $6.7 billion, down 4% from the previous year.

In 2024, the business experienced a 25% increase in operational cash flow, reaching $3 billion, due to better working capital management. The company invested $1.3 billion in capital expenditures for new stores, remodels, relocations, distribution, transportation projects, and strategic initiatives. Shareholders received $130 million through a quarterly dividend. The company is content with its cash and inventory positions and aims to build on its progress in 2025. The financial outlook for 2025 includes anticipated net sales growth of 3.4% to 4.4%, same-store sales growth of 1.2% to 2.2%, and earnings per share ranging from $5.10 to $5.80, assuming a tax rate of about 23.5%. Capital spending is expected to be between $1.3 billion and $1.4 billion to support growth, aligned with capital allocation priorities, focusing on investments in existing stores and high-return growth opportunities.

In 2025, the company plans to embark on approximately 4,885 real estate projects, including new store openings, remodels, and expansions in the US and Mexico, alongside technology investments in finance and HR systems. Although they will not repurchase stock this year, they are committed to shareholder returns through dividends, recently approving a cash dividend of $0.59 per share. They aim to improve debt metrics to maintain their investment-grade credit ratings of BBB and BAA2. The company anticipates economic pressures on customers to remain steady, foresees positive impacts on gross margin from reduced shrinkage, and intends to lower SG&A expenses. Their outlook for 2025 assumes a stable macroeconomic environment with acknowledged uncertainties.

In 2025, Dollar General plans to manage financial pressures stemming from retail wage rate inflation, incentive compensation returning to normal levels, and continued depreciation and amortization expenses due to past capital spending and building material costs. The first half of the year will be particularly impacted by costs associated with store remodels under Project Elevate and increased labor expenses, mainly due to the removal of self-checkout systems. Despite these challenges, the company is optimistic about achieving long-term growth and shareholder value, aiming to enhance both top-line and bottom-line results by completing most real estate projects by Q3. Todd Vasos is addressed at the end as the call is turned back over to him.

Todd Vasos discusses near-term initiatives to enhance the in-store experience for both associates and customers, emphasizing convenience and speed. They are retraining staff to provide a fast and friendly service and simplifying operations by removing unnecessary tasks. This includes optimizing inventory and SKU productivity, improving shrink and damage efforts, and refining distribution processes. The rollout of a new point of sale system is also a priority to simplify checkout. Overall, these efforts aim to enhance the core business and improve customer service. Additionally, Vasos briefly mentions a new initiative called Project Elevate, announced in December.

The paragraph outlines the company's new remodel initiative, Project Elevate, which aims to enhance performance in mature stores not yet due for full renovation. The goal is to achieve 3% to 5% first-year sales lifts and reduce future repair costs by refreshing physical assets and optimizing merchandising, impacting 80% of these stores. Together with Project Renovate, which focuses on complete remodels, the company plans to revamp 20% of its store base annually, improving shopping experiences and boosting brand value. Additionally, the digital initiative complements their physical stores by enhancing customer engagement through mobile apps, websites, delivery options, and the DG Media Network. A successful delivery partnership with DoorDash covers over 16,000 stores, with plans to expand and now includes SNAP and EBT transactions. This has laid the groundwork for launching the company's own delivery service, with a same-day home delivery test starting in September.

Dollar General Corporation is expanding its delivery services in partnership with DoorDash, launching from approximately 400 stores and seeing positive early results, including increased sales at Pop Shelf locations. The company plans to use insights from this initiative to enhance its non-consumable offerings across Dollar General stores. As they aim to improve Pop Shelf results by 2025, they are also conducting a portfolio review to strengthen their business foundation. Additionally, Steve Deckard and Tracy Hermann have been appointed to new leadership roles, focusing on expanding the company's footprint and improving store operations. Overall, Dollar General is progressing toward profitable growth and long-term shareholder value.

In the paragraph, Kelly Dilts reviews the Q4 financial performance and future guidance. The gross profit margin decreased by 8 basis points to 29.4%, largely due to increased markdowns, inventory damages, and distribution costs, although lower shrink and higher inventory markups provided some relief. Shrink mitigation efforts resulted in a 68 basis point improvement and are expected to benefit throughout 2025. The SG&A expenses rose by 294 basis points to 26.5%, driven by $214 million in impairment charges from a portfolio review and increased costs related to labor, incentives, maintenance, depreciation, and technology. This increase was partly offset by reduced professional fees.

In the fourth quarter, the company's operating profit dropped by 49% to $294 million, impacted by $232 million in charges from a portfolio review. Operating profit as a percentage of sales fell by 302 basis points to 2.9%. Net interest expense decreased to $66 million, and the effective tax rate was reduced to 16.2% due to rate-impacting items on lower pre-tax earnings. EPS fell by 52.5% to $0.87, with an adverse impact of $0.81 per share from the portfolio review charges. Merchandise inventories decreased by 4% to $6.7 billion, with a 6.9% per store reduction. The company praised its team for improving inventory management, which positively affected operations. In 2024, cash flow from operations increased by 25% to $3 billion due to better working capital management, while capital expenditures totaled $1.3 billion for strategic initiatives. During the quarter, $130 million was returned to shareholders through dividends. Overall, the company expressed satisfaction with its cash and inventory positions and its strengthened balance sheet.

The paragraph outlines the financial outlook and strategic plans for 2025, highlighting expected growth in net sales and same-store sales, and an EPS range alongside a projected 23.5% tax rate. It details a capital spending plan of $1.3 to $1.4 billion focusing on business investment, including approximately 4,885 real estate projects with 575 new store openings in the U.S. and up to 15 in Mexico. Additionally, it mentions significant investments in technology, particularly a new enterprise resource planning system. The company also plans to return cash to shareholders through dividends and potential share repurchases.

The board approved a quarterly cash dividend of $0.59 per share but won't repurchase stock this year. The company is focused on improving its debt metrics and maintaining investment-grade credit ratings of BBB and Baa2. For 2025, the outlook is macro-neutral, acknowledging economic uncertainty and pressure on the core customer. Gross margin improvement is expected from positive shrink results, while SG&A will face pressures from increasing retail wage rates (3.5%-4%), higher incentive compensation, and depreciation and amortization due to past capital spending and building material inflation. The company is also working to reduce controllable expenses.

The company does not plan to provide quarterly financial guidance but offers insights into its financial expectations for 2025. The first half of the year will face pressure from expenses related to increased real estate projects, notably Project Elevate, compared to 2024. The aim is to complete most projects by the end of Q3 to optimize operating weeks for 2025. Additionally, labor expenses will rise in Q1 due to phasing out self-checkouts. Despite immediate challenges, the company believes its plans for 2025 will support growth in the following years, particularly for 2026 and beyond. They have revised their medium and long-term financial strategy, emphasizing long-term shareholder value. The updated framework aims for annual net sales growth of 3.5-4%, including about two new unit growth. Specific goals and timelines are outlined, with expectations of achieving some targets sooner than others.

The article outlines a strategic plan to enhance the company's financial performance starting from 2025. By 2026, the company aims for an annual same-store sales growth of 2-3% by relying on stable financial conditions of their core customers and leveraging mature stores. They also target operating margin expansion by 2026, aiming for a 6-7% range by 2028. This will be achieved by improving gross margin and SG&A efficiencies, including initiatives like the DG Media network and non-consumable merchandising, alongside reducing shrinkage and damages. The company plans to optimize SG&A by simplifying work processes, reducing repair expenses, and managing capital expenditures to stabilize depreciation. The overarching goal is to boost profitability and minimize SG&A impact on sales over the medium to long term.

The paragraph outlines Dollar General Corporation's financial and operational strategies. The company plans to allocate capital expenditures at around 3% of sales, resume share repurchases, and achieve at least 10% annual EPS growth on an adjusted basis starting in 2026. The focus is on long-term growth and creating shareholder value by enhancing the in-store experience, retraining staff, and simplifying operations to improve convenience and efficiency for customers. Todd Vasos emphasizes both near-term actions and long-term goals to strengthen the business and serve customers better.

The company is focusing on improving inventory and SKU productivity through assortment and allocation optimization, as well as enhancing distribution processes to speed up product availability. They aim to complete the rollout of a next-generation point of sale system to streamline checkout and in-store operations. Additionally, they introduced Project Elevate to boost performance in maturing stores by driving sales and reducing costs through asset refreshes and merchandising optimization. Alongside Project Renovate, they plan to update around 20% of their store base annually, enhancing customer experience and increasing profitability. The company is satisfied with their strong performance in the fourth quarter.

In the paragraph, the speaker reflects on the past year's success, highlighting Dollar General Corporation's strong Q4 and full-year performance. The company achieved over $40 billion in annual sales for the first time, indicating its crucial role in serving over 20,000 communities across the U.S. The speaker credits the associates for their dedication and mentions efforts like portfolio optimization for Dollar General Corporation and Pop Shelf. Q4 saw a 4.5% increase in net sales, reaching $10.3 billion. The company also gained market share in both consumable and non-consumable product sales. Future plans and initiatives for 2025 will focus on sustaining growth and fulfilling their mission.

The article discusses a 1.2% increase in same-store sales, driven by a 2.3% rise in average transaction amounts, attributed to higher unit retail prices and more items per transaction. However, customer traffic declined by 1.1% due to financial pressures and strong traffic in the previous year. Growth was led by the consumable category, while seasonal home and apparel saw declines. Monthly, December and January performed better than November. Despite worsening financial conditions for customers and inflation, the company remains committed to offering value and convenience. While not expecting an improved macro environment in 2025, the company is confident in its low-price strategy and ability to handle tariffs based on past experiences.

The paragraph discusses Dollar General Corporation's strategic decisions following a review of its real estate portfolio. Due to economic challenges affecting core customers, the company evaluated its store operations and decided to close 96 Dollar General stores, primarily in urban areas, to better allocate resources. Additionally, 51 Pop Shelf locations were marked for closure due to financial and operational factors, with six of these being converted into Dollar General stores, leaving 180 Pop Shelf stores. These actions aim to strengthen the company's foundation for future growth.

The paragraph discusses Dollar General Corporation's optimism for improving its Pop Shelf brand's sales in 2025, despite recent negative impacts on Q4 financial results due to impairment charges. The company plans to enhance sales through initiatives like new brand partnerships, an improved in-store experience, and expanded categories, which have already shown positive early results. The brand's success is expected to influence non-consumable categories in Dollar General stores. While some store closures were necessary, they believe these actions have strengthened the business. Additionally, the announcement congratulates Steve Deckard and Tracy Hermann on new leadership roles within the organization.

The paragraph discusses leadership changes and financial performance at Dollar General Corporation. A new leader will focus on company expansion, process improvements, and corporate strategy, while Tracy will lead store operations with an emphasis on operational excellence and innovation. The company is positioned for profitable growth and long-term shareholder value. Kelly Dilts then reports on Q4 financial results, noting a slight decrease in gross profit percentage due to markdowns, inventory damages, and higher distribution costs, although these were partially offset by lower shrink and higher inventory markups. Despite these challenges, their shrink mitigation efforts have been successful, with a significant improvement in shrink, and these benefits are expected to continue into 2025.

In the fourth quarter, SG&A expenses increased to 26.5% of sales, largely due to a $214 million impairment charge and other rising costs, despite a reduction in professional fees. Operating profit dropped 49% to $294 million, affected by a $232 million portfolio review charge, and stood at 2.9% of sales. Net interest expense decreased to $66 million from $77 million the previous year, and the effective tax rate declined to 16.2% from 20%, influenced by lower earnings before taxes. EPS fell 52.5% to $0.87, impacted by portfolio review charges. Inventory was reduced by $283 million to $6.7 billion, aiding sales and operations. The company generated $3 billion in cash flows in 2024, up 25% due to better working capital management.

In 2024, the company made capital expenditures of $1.3 billion on new stores, remodels, relocations, and strategic initiatives, and returned $130 million to shareholders through dividends. The company is pleased with its financial position and progress on strengthening its balance sheet. Looking ahead to 2025, the company plans to continue investments to solidify its foundation for future growth, projecting net sales growth of 3.4% to 4.4%, same-store sales growth of 1.2% to 2.2%, and EPS of $5.10 to $5.80, with an assumed tax rate of 23.5%. Capital spending is expected to be between $1.3 billion and $1.4 billion, focusing on business investment, store expansions, and strategic initiatives.

The article discusses the company's real estate and technology investment plans for 2025, which include nearly 4,885 real estate projects such as new store openings in the U.S. and Mexico, and numerous remodels. It also mentions the implementation of a new enterprise resource planning system for finance and HR. In capital allocation, the company plans to return cash to shareholders via dividends, with a recent approval of a 59-cent per share dividend, although they have no plans for stock repurchases this year. The company aims to improve its above-target leverage ratio of three times adjusted debt to EBITDAR to maintain its investment-grade credit ratings of BBB and BAA2. There is also a recognition of economic uncertainty, expecting consistent economic pressure on core customers, but positive shrink results are anticipated to boost gross margins in 2025.

In 2025, the company plans to reduce controllable expenses within SG&A but still expects to face financial pressures due to several factors. These include retail wage rate inflation of 3.5% to 4%, a return to normal incentive compensation levels after lower payouts, and increased depreciation and amortization costs from past capital spending and inflation in building materials. The company anticipates more expenses in the first half of 2025 due to remodel projects, particularly Project Elevate, with most projects planned for completion by the end of Q3 to maximize operational benefits. Additionally, Q1 will face labor expense pressures due to the removal of self-checkout in most stores compared to 2024. The company does not plan to provide quarterly financial guidance but highlights these expected impacts.

The article discusses the company's strategic financial plans for 2025 and beyond, with an emphasis on long-term growth and shareholder value. The plan involves achieving 3.5% to 4% annual net sales growth, including new unit growth starting in 2025, and 2% to 3% annual same-store sales growth starting in 2026. The company also targets operating margin expansion beginning in 2026, aiming for 6% to 7% by 2028. This growth strategy assumes a return to financial stability for core customers and anticipates leveraging mature stores and various catalysts to drive results.

The paragraph outlines the company's strategies to improve profitability and efficiency over the next five years. Key initiatives include enhancing gross margins through contributions from various projects like the DG Media network and non-consumable merchandising, aiming for a 150 basis point increase. The company is also focusing on reducing shrink and damages, targeting improvements of 80 and 40 basis points, respectively. In SG&A, the focus is on simplifying operations, reducing maintenance costs, and optimizing expenses. The company plans to allocate capital expenditures around 3% of sales and may restart share repurchases by the next year. The long-term goal is to achieve annual EPS growth of at least 10% starting in 2026, while continuing to invest in customer value and convenience, and returning cash to shareholders.

The paragraph discusses Dollar General Corporation's plans to enhance the in-store experience and improve operations in the near term. Key initiatives include retraining staff to ensure fast, friendly service, simplifying the operating model by removing unnecessary tasks, and optimizing inventory and SKU management. The company is also focusing on making upstream improvements in distribution centers and completing a new point of sale rollout to streamline checkout and in-store processes, all aimed at supporting long-term growth and value creation.

The paragraph outlines the company's efforts to enhance its core business through initiatives like Project Elevate, which involves incremental store remodels to boost performance and profitability in mature stores. The project aims for a first-year sales lift of 3-5% while reducing future repair costs. Combined with a full remodel program called Project Renovate, the company aims to impact 20% of its stores annually, enhancing the shopping experience and brand. Additionally, the company is advancing its digital initiatives to improve customer convenience, with a focus on its mobile app, website, delivery options, and a DG Media network partnership with DoorDash, aiming for further growth in 2025.

The paragraph discusses Dollar General Corporation's recent initiatives, including the processing of SNAP and EBT transactions and the expansion of a same-day home delivery service in partnership with DoorDash, currently implemented in 400 stores. These efforts have resulted in increased sales, particularly in their pop shelf stores, and the company plans to leverage these learnings to enhance offerings in non-consumable categories at Dollar General stores. They aim to improve pop shelf results by 2025 and are conducting a portfolio review to strengthen the business. The paragraph concludes with the announcement of new leadership roles for Steve Deckard and Tracy Hermann within the organization.

The paragraph discusses leadership transitions and financial performance at Dollar General Corporation. It mentions the confidence in a new leadership role focused on expansion and strategy, and highlights Tracy's experience as beneficial for store operations. The company is pleased with progress in driving sales growth and creating shareholder value. Kelly Dilts then presents Q4 financial results, noting a slight decrease in gross profit percentage due to various factors, including markdowns and distribution costs, though improvements in shrink (inventory loss) have provided benefits that are expected to continue through 2025.

In the fourth quarter, SG&A expenses increased by 294 basis points to 26.5% of sales, mainly due to a $214 million impairment charge and rises in retail labor and other expenses, partially offset by a decrease in professional fees. Operating profit dropped 49% to $294 million, impacted by $232 million from portfolio review charges, reducing it to 2.9% of sales. Net interest expense decreased to $66 million from $77 million, and the effective tax rate was 16.2%, down from 20% last year. EPS fell by 52.5% to 87 cents, including an 81 cents per share negative impact from the portfolio review. Merchandise inventories decreased by $283 million, or 4%, to $6.7 billion, reflecting a 6.9% decline per store.

In 2024, the company successfully reduced inventory while increasing sales and enhancing operational efficiency, resulting in a 25% increase in cash flows from operations, totaling $3 billion. Capital expenditures were $1.3 billion, funding new stores, remodels, relocations, and strategic initiatives. The company returned $130 million to shareholders via dividends and is pleased with its cash and inventory position, highlighting progress in strengthening the balance sheet. For 2025, the company aims for net sales growth of 3.4% to 4.4%, same-store sales growth of 1.2% to 2.2%, and EPS between $5.10 and $5.80, with continued investments to lay a foundation for future growth.

The paragraph outlines the company's financial guidance and strategic priorities for 2025. They anticipate an effective tax rate of 23.5% and plan capital expenditures between $1.3 billion and $1.4 billion to support growth and capital allocation priorities. The company plans to work on approximately 4,885 real estate projects, including 575 new U.S. stores, 2,000 full remodels, 2,250 project elevate remodels, 45 other projects, and up to 15 new stores in Mexico. Additionally, they are investing in technology projects, particularly a new enterprise resource planning system. The company aims to return cash to shareholders through dividend payments, but does not plan to repurchase stock this year, though it remains a future focus. Despite a leverage ratio above their target, they are committed to maintaining their investment-grade credit ratings.

The article outlines the company's financial outlook for 2025, highlighting expected economic pressures on their core customers and a stable macro environment. The main factors affecting gross margin will be continued positive results from inventory shrinkage reduction, while SG&A costs aim to be reduced through controllable expense management. The company anticipates challenges from retail wage inflation, expected to rise by 3.5% to 4%, and increased incentive compensation, representing a $120 million headwind, after two years of lower payouts. Furthermore, depreciation and amortization pressures will persist due to previous high capital spending and inflation. They predict more financial pressure in the first half of 2025 due to remodel expenses and real estate projects under Project Elevate. The company will not provide quarterly financial guidance but aims to outline the expected financial cadence for 2025.

The company aims to complete most of its real estate projects by the end of the third quarter to benefit the 2025 operating year. They anticipate labor expenses will be higher in the first quarter compared to the same period in 2024 due to changes in self-checkout availability. The company is focused on long-term growth and has updated its financial framework for the next three to five years. They plan to drive sustainable shareholder value by achieving annual net sales growth of 3.5% to 4%, with new unit growth beginning in 2025. Starting in 2026, they aim for same-store sales growth of 2% to 3% annually, assuming core customers achieve financial stability and mature stores drive more sales.

The company aims to expand its operating margin starting in 2026, with a long-term goal of reaching 6-7% by 2028. To achieve this, they plan to enhance gross margins through initiatives like the DG Media network and non-consumable merchandising, potentially gaining 150 basis points. They also aim to return to pre-pandemic shrink levels and reduce damages, improving margins by 80 and 40 basis points, respectively. In SG&A, they aim to simplify work, boost efficiency, reduce maintenance costs, and optimize capital expenditure. These efforts, led by Steve Deckard's team, will focus on increasing profitability and stabilizing expenses, supporting the company's financial strategies.

The paragraph discusses Dollar General Corporation's financial and strategic plans. It targets annual capital expenditures of about three percent of sales and plans to resume share repurchases by 2020. From 2026, the company aims for annual EPS growth of at least ten percent on an adjusted basis. Confidence is expressed in the strength of the business model and its potential for long-term growth and shareholder value. Todd Vasos highlights initiatives to enhance the in-store experience for customers and associates, focusing on convenience, retraining staff for a fast and friendly service, and simplifying the operating model by reducing unnecessary tasks and focusing on inventory and SKU productivity.

The paragraph discusses various strategies the company is implementing to improve operations and increase profitability. Efforts include optimization in distribution and point of sale systems to reduce product handling times in stores. The company is also focusing on Project Elevate, an initiative to remodel older stores to boost sales and reduce future expenses. This involves asset refreshes and merchandising updates, affecting about 80% of each store and aiming for a 3-5% sales increase. Combined with a broader remodel program, the company expects to update 20% of its store base annually. Additionally, enhancing the digital experience is emphasized to complement the physical store presence.

The paragraph discusses the expansion and enhancement of Dollar General's digital and delivery services. It highlights successful partnerships, particularly with DoorDash, for delivery services from over 16,000 stores, with plans to grow by 2025. The company has also started accepting SNAP and EBT payments through this channel to attract new customers and boost sales. Dollar General has begun testing same-day home delivery in select stores, expanding this across roughly 400 stores with DoorDash. Initial results show a sales increase, particularly in pop shelf stores, with future plans to apply these insights to other product categories and improve their offering by 2025.

The paragraph outlines the strategic changes and leadership appointments at Dollar General Corporation. The company has closed some stores but believes that these actions, along with appointing Steve Deckard and Tracy Hermann to new leadership roles, are strengthening its foundation for future growth. Steve Deckard will focus on expansion and corporate strategy, while Tracy Hermann will lead store operations, emphasizing operational excellence and innovation. The company is optimistic about its progress and potential for profitable growth. The paragraph then transitions to Kelly Dilts discussing Q4 financial results and future financial goals. She notes that gross profit as a percentage of sales decreased by eight basis points due to higher markdowns, inventory damages, and distribution costs.

In the fourth quarter, there was a greater proportion of sales from consumables, offset partially by improved shrink, which saw a year-over-year improvement of 68 basis points and is expected to continue improving through 2025. Selling, General and Administrative (SG&A) expenses increased by 294 basis points to 26.5% of sales, due to factors like retail labor and technology expenses, but were partially offset by reduced professional fees. Operating profit decreased by 49% to $294 million, impacted by $232 million in charges from a portfolio review. Operating profit as a percent of sales decreased by 302 basis points. Net interest expense dropped to $66 million, while the effective tax rate decreased to 16.2% from 20%, largely due to certain rate-impacting items on lower pre-tax earnings.

In this paragraph, the company reports a decrease in earnings per share (EPS) by 52.5% to 87 cents, largely due to charges from a portfolio review. Merchandise inventories decreased by $283 million, or 4%, year-over-year, reflecting effective inventory management. Cash flow from operations increased by 25% to $3 billion in 2024 due to better working capital management, and capital expenditures totaled $1.3 billion, focused on growth and strategic projects. The company returned $130 million to shareholders through dividends and overall expresses satisfaction with its improved cash and inventory position and strengthened balance sheet. Finally, the paragraph transitions to discuss the financial outlook for 2025.

The company plans to continue its growth and investment efforts into 2025. They project net sales growth between 3.4% and 4.4%, same-store sales growth between 1.2% and 2.2%, and earnings per share (EPS) between $5.10 and $5.80, assuming a 23.5% tax rate. Capital spending is expected to range from $1.3 billion to $1.4 billion to support growth priorities like existing store investments, new store expansions, and strategic initiatives. They plan approximately 4,885 real estate projects, including 575 new U.S. stores, 2,000 remodels, and 2,250 project elevate remodels, with additional stores in Mexico. They are also investing in technology projects, particularly a new enterprise resource planning system. Additionally, the company aims to return cash to shareholders through dividends and share repurchases.

The company's board of directors has approved a quarterly cash dividend of 59 cents per share, and while they don't plan to repurchase common stock this year, they see it as important for the future. They aim to improve debt metrics to maintain their current investment-grade credit ratings of BBB and Baa2, despite their leverage ratio being above the target. For 2025, they anticipate economic pressure on their core customers similar to late 2024 levels. They expect improved shrink results to benefit gross margins, but also predict expense pressures in SG&A due to retail wage inflation and a return to normal incentive compensations, which would pose a $120 million headwind. Depreciation and amortization will continue to be a challenge as well.

The paragraph discusses the company's financial outlook for 2025 and its strategic planning for future growth. In 2025, the company expects increased expenses in the first half due to more real estate projects and labor expense headwinds. The company aims to complete most real estate projects by the end of the third quarter to maximize operation. Looking ahead to 2026 and beyond, the company is focused on sustainable long-term shareholder value and has updated its financial framework to drive growth over the next three to five years. The company is targeting specific financial goals with varying timelines, starting with net sales.

The company aims for annual growth of 3.5% to 4% starting in 2025, with plans to open approximately two new units. From 2026, it targets same-store sales growth of 2% to 3%, assuming financial stability among core customers. Operating margins are expected to expand from 2026, aiming for 6% to 7% by 2028. Growth strategies include improving gross margins through initiatives like the DG Media network and non-consumable merchandising, potentially increasing margins by 150 basis points. They also plan to reduce shrinkage, improve damage rates, and cut SG&A costs through efficiency measures, including simplifying operations, reducing maintenance expenses, and optimizing capital expenditures.

The paragraph discusses Dollar General Corporation's financial and strategic plans. Steve Deckard and his team are focusing on increasing profitability and reducing SG&A expenses. The company aims for annual capital expenditures at about three percent of sales and plans to resume share repurchases soon. By 2026, they aim for a ten percent annual EPS growth. Todd Vasos emphasizes enhancing the in-store experience through retraining and focusing on speed and friendliness to improve convenience for customers. The overarching goal is to sustain long-term growth and shareholder value.

The company is simplifying its operations by removing unnecessary activities and focusing on inventory and SKU productivity to improve shrink and damage rates. They are optimizing distribution processes to speed up product shelving and are rolling out a new point of sale system to streamline checkout and in-store tasks. The company introduced Project Elevate to enhance performance in mature stores that aren't ready for full remodels, aiming to boost sales by 3-5% and reduce future repair expenses. This involves refreshing physical assets and optimizing merchandising in about 80% of the stores. Combined with Project Renovate, they aim to update 20% of their stores annually.

The company is focused on enhancing the shopping experience by integrating technology to boost both in-store and digital engagement. They have seen increased user activity on their digital platforms, such as their mobile app and website, and have formed a successful partnership with DoorDash to offer delivery services in over sixteen thousand stores. This partnership has expanded to include SNAP and EBT transactions, attracting new customers and increasing sales. Additionally, the company is testing its own delivery service, utilizing DoorDash to facilitate same-day deliveries from around four hundred stores, which has shown promising sales growth in their pop shelf stores.

The paragraph discusses Dollar General Corporation's strategy to enhance sales and growth by capitalizing on learnings from the pop shelf banner and applying them to non-consumable categories in their stores. The company is optimistic about improving top shelf results by 2025 and emphasizes the importance of portfolio review for strengthening the business foundation. The paragraph also announces new leadership roles for Steve Deckard and Tracy Hermann, highlighting their strategic and operational expertise. The overall message is about continuing progress, driving profitable sales growth, capturing opportunities, and creating long-term shareholder value. The call will proceed with Kelly Dilts discussing Q4 financial results and future financial guidance.

The paragraph provides an overview of the financial performance for the fourth quarter, noting a decrease in gross profit margin to 29.4% due to increased markdowns, inventory damages, distribution costs, and a higher proportion of sales in the consumables category. Shrink mitigation efforts led to a 68 basis point improvement, expected to continue into 2025. SG&A expenses rose to 26.5% of sales, driven by $214 million in impairment charges and other increased expenses, with a decrease in professional fees as the exception. Operating profit dropped by 49% to $294 million, primarily due to $232 million in charges from a portfolio review, with operating profit margin decreasing to 2.9%. Net interest expense decreased to $66 million from $77 million the previous year.

In the quarter, the company saw a reduced effective tax rate of 16.2% compared to 20% the previous year, due to certain rate-impacting items on lower earnings before taxes. Despite this, the EPS fell by 52.5% to $0.87, influenced by charges from a portfolio review. Merchandise inventories dropped by $283 million, or 4%, compared to the prior year, with a 6.9% decrease on a per-store basis. Cash flow from operations increased by $604 million, or 25%, reaching $3 billion in 2024, driven by improved working capital management. Capital expenditures totaled $1.3 billion and included investments in various strategic projects. The company returned $130 million to shareholders through dividends. Overall, the firm is pleased with its cash and inventory positions and the progress in strengthening its balance sheet, attributing these results to the business model and a focus on basics. Looking ahead, they aim to discuss the financial outlook for 2025.

The company plans to continue its growth and strengthening efforts in 2025, projecting net sales growth between 3.4% to 4.4% and same-store sales growth from 1.2% to 2.2%. Earnings per share are expected between $5.10 to $5.80, assuming a tax rate of around 23.5%. They plan to invest $1.3 billion to $1.4 billion in capital spending, focusing on store expansions, remodels, and technology upgrades. Specifically, they aim to undertake 4,885 real estate projects, including 575 new stores in the U.S., multiple remodels, and up to 15 new stores in Mexico. Additionally, the company will invest in a finance and HR modernization project. Capital allocation priorities also include returning cash to shareholders through dividends and share repurchases when appropriate.

The board of directors has approved a quarterly cash dividend of 59 cents per share and does not plan to repurchase common stock for this year, although future repurchases are important. The leverage ratio is above the target, but efforts are underway to improve debt metrics to maintain investment-grade credit ratings of BBB and Baa2. The 2025 outlook is based on a macro-neutral viewpoint, acknowledging uncertainty in the broader economy and impact on core customers. Economic pressure on core customers is expected to remain consistent with the end of 2024 levels. Positive shrink results are anticipated to enhance gross margin, but SG&A controllable expenses will be reduced. However, operating expenses and sales expectations suggest deleveraging in 2025, with retail wage rate inflation influencing costs between 3.5% to 4%. Normalized short and long-term incentive compensations will exert a $120 million headwind, alongside pressure from depreciation and amortization.

The paragraph outlines the company's financial expectations and strategic plans for 2025 and beyond. It highlights anticipated higher expenses due to increased capital spending, inflation in building materials, and remodeling projects, including Project Elevate, with a focus on completing most real estate projects by the end of Q3 2025. Labor expenses are expected to rise in Q1 2025 due to the removal of self-checkout in stores. The company aims to drive growth in 2026 and beyond by focusing on long-term shareholder value and has updated its financial framework for the next three to five years, indicating a sharp focus on achieving its goals within specified timelines, starting with net sales.

The paragraph outlines the company's financial growth and expansion targets over the coming years. They aim for an annual growth rate of 3.5% to 4% starting in 2025, with plans for two new unit growth. In 2026, same-store sales growth is expected to be 2% to 3% annually, assuming customers return to stable financial conditions. Operating margins are targeted to expand, reaching 6% to 7% by 2028, supported by gross margin improvements and SG&A reductions. The gross margin improvement focuses on contributions from new initiatives like the DG Media network and strategies to reduce shrink and improve damages, collectively adding a potential 150 basis points. SG&A will see cost savings through efficiency initiatives, reduced repairs, and optimized capital expenditures over the next five years.

The focus of Steve Deckard and his team is on increasing profitability and minimizing SG&A deleverage over the medium to long term, with a capital expenditure target of approximately 3% of sales and plans to restart share repurchases. Beginning in 2026, they aim for at least 10% annual EPS growth on an adjusted basis. Kevin Walker and Dollar General Corporation are confident in their long-term strategy to drive sustainable growth and create shareholder value. Todd Vasos highlights near-term initiatives to improve in-store experiences by retraining staff to deliver a fast and friendly customer experience, emphasizing the importance of convenience and quality service.

The company is striving to enhance customer service and operational efficiency by simplifying its operating model, focusing on inventory and SKU productivity, and optimizing assortment and allocation. These efforts aim to improve product availability, reduce shrinkage, and enhance the checkout process with next-generation point of sale systems. Additionally, the company is implementing Project Elevate to boost profitability in mature stores through incremental remodeling, targeting a 3% to 5% increase in first-year comparable sales and reducing future maintenance costs. This initiative will include physical upgrades and merchandising enhancements, impacting approximately 80% of the stores.

The company is enhancing its store experience with Project Renovate, aiming to improve 20% of its stores annually. Additionally, it is focusing on expanding its digital presence, with increased customer engagement on its app, website, and delivery services. A successful partnership with DoorDash covers over 16,000 stores, and they plan to grow sales through this channel by 2025. New initiatives, including SNAP and EBT transactions and a self-delivery test program, aim to boost customer acquisition and sales. Early trials of same-day home delivery are promising, showing higher average purchases than in physical stores.

The company aims to leverage its extensive real estate footprint to become a leading home delivery option, with plans to market and scale this service to 10,000 stores by 2025. This initiative will support the growth of their digital platform, DG Media Network, enhancing personalized customer experiences and partner ad spend efficiency. The company expects this approach to boost customer loyalty and market share, driving profitable sales growth. Additionally, the company focuses on non-consumable growth, with significant sales in home, seasonal, and apparel categories. However, while these categories have shown market gains, consumable sales have been outpacing them, impacting overall profit margins as consumables now make up 82% of sales.

Dollar General Corporation aims to increase its non-consumable sales mix by 100 basis points by 2027 and return it to approximately 20% of overall sales within five years, while maintaining its strong consumable performance. To achieve this, the company has outlined four growth pillars: brand partnerships to highlight quality and value, an enhanced treasure hunt with improved home assortments, reallocating space for more productive offerings, and boosting non-consumable category productivity through planogram updates and innovation. They are implementing a strategic marketing approach to highlight their product range and value, with the goal of capturing more market share and driving growth. Reflecting on 2024, Dollar General acknowledges the challenges faced but sees it as a pivotal year for strengthening the business foundation.

The company expresses pride in its progress and readiness for future steps, particularly in 2025, aligning with its long-term financial goals. The mission to serve others remains central, and the team is energized and confident following meetings with field leaders. The CEO expresses gratitude to the 194,000 employees and looks forward to accomplishments in 2025. During the Q&A, Kate McShane from Goldman Sachs asks about the expected trajectory of operating margin expansion until 2028 and structural business challenges. Kelly Dilts begins to address these assumptions regarding mid to longer-term outlooks.

The paragraph outlines a company's strategic plans to achieve sales and gross margin targets by 2025, focusing on improvements in mature store sales and controlling shrink and damage costs. The company sees positive trends in these areas, attributing success to initiatives like back-to-basics actions, private brands, category management, inventory optimization, and supply chain efficiencies. While acknowledging that some initiatives, such as the DG Media Network and non-consumable mix, may take time to yield results, the company maintains confidence in its established framework. The passage concludes with an operator introducing the next question from Simeon Gutman of Morgan Stanley to Todd, seeking insights on consumer behavior.

In the paragraph, Todd Vasos discusses the current consumer spending behavior, highlighting that while the economic situation remains challenging, consumers are adapting and becoming more resourceful with their budgets. He notes that there is a noticeable trend of consumers trading down to cheaper options, a trend that seems to be accelerating as they move from Q4 into Q1. Vasos also mentions that the company's initiatives and focus on fundamental strategies have positively impacted their financial performance. He emphasizes confidence in the team's efforts and believes they are well-positioned for long-term success.

The paragraph is from a discussion involving Todd Vasos and Kelly from Dollar General Corporation, addressing questions from Matthew Boss of JPMorgan. They discuss the progress and future plans of the company's "back to basics" strategy, initiated about 15 months ago. Todd highlights that the team has made significant strides in addressing shrinkage, turning it into a tailwind and expecting this trend to continue into 2025 and 2026. The focus has been on improving store productivity, and this initiative will intensify in 2025. Kelly's input touches on leveraging SG&A (Selling, General, and Administrative expenses) in 2025 and mentions considerations regarding gross margin impacts for the first quarter. Overall, the company is committed to executing these strategies at a high level to enhance their service to customers amidst changing tariff environments.

The paragraph discusses strategic efforts to enhance productivity and inventory management for 2025. Steve Deckard's role is emphasized in driving productivity measures, and there's a focus on improving numbers through various strategies. A notable 6.9% decrease in inventory per store in Q4 and the removal of 1,000 SKUs from planograms are highlighted as achievements. More SKU reductions and optimizations are planned for 2025. The paragraph also mentions enhancing distribution center productivity and optimizing processes like the rotator process and case pack optimization. These efforts aim to reduce the number of touches needed in stores, improving efficiency across a network of 20,000 stores.

The paragraph discusses the company's plans and expectations for 2025, focusing on addressing financial considerations such as the P&L and SG&A headwinds. The speaker expresses excitement about the 2025 plans, emphasizing the company's "back to basics" strategy and other growth-driving actions. The guidance for 2025 is based on a macro-neutral outlook, accounting for continued economic pressure on consumers at levels similar to the end of 2024. The guidance allows for uncertainty in the macroeconomic environment and consumer behavior. However, it does not consider potential changes in tariffs, SNAP benefits, or significant shifts in consumer demand due to tariffs. Margin improvements are expected, driven by shrink reductions, and further details are provided on SG&A headwinds and cadence.

During the first two quarters, the company anticipates pressure on year-over-year comparisons with a decrease in EPS due to initial expenses from remodels, including Project Elevate, and more real estate projects than the previous year. They aim to complete most of these projects by the end of Q3 to benefit operations in 2025. In Q1, there are additional cost pressures from self-checkout labor expenses and store closures, expected to cost around $20 million. Q2 is affected by incentive compensation headwinds, with upcoming wage rate inflation projected at 3.5% to 4% for the year. Overall, short- and long-term incentive compensation is expected to be about $120 million, with potential variations depending on guidance.

The paragraph discusses the financial strategies and real estate plans for Dollar General Corporation. Despite challenges such as depreciation, rent, utilities, and repairs, the company has implemented actions to mitigate these issues and is poised for growth, particularly projecting double-digit EPS growth by 2026. The dialogue involves Zhihan Ma from Bernstein asking about potential store closures and investment returns on new store openings, Project Elevate, and remodels. Todd Vasos explains the strategic decision to review their entire portfolio, leading to the closure of 96 Dollar General stores and 45 Pop Shelf stores, primarily in urban and metro areas. He emphasizes that while closing stores is difficult, it was necessary and affects less than 1% of their total stores.

The paragraph discusses the challenges of running profitable stores, highlighting Dollar General Corporation's strategy for growth. Despite difficulties, the company sees potential for expansion, identifying 12,000 potential store locations in the U.S. and plans to open 15 stores in Mexico. The Pop Shelf brand has shown positive customer feedback and sales growth. The company is in the early stages of testing and learning with Pop Shelf, closing 51 underperforming stores while converting some into Dollar General stores. This test-and-learn approach is aimed at understanding market demographics and optimizing store placement.

The paragraph discusses the financial outlook and growth opportunities for the company, emphasizing new store expansion and improvements in existing stores. The company sees a 17% internal rate of return (IRR) with a two-year payback period and has many potential new locations. They've balanced capital allocation between new and existing stores and aim to maximize mature store performance. Project Elevate is expected to boost sales by 3% to 5%, affecting 20% of stores and 25% of mature stores. Project Renovate, a traditional remodel, is anticipated to provide a 6% to 8% sales lift. The company is also focusing on enhancing processes to reduce repairs and maintenance costs. Overall, they are optimistic about their growth strategy over the next few years. After outlining this, the operator invites a new question from Rupesh Parikh of Oppenheimer, who asks about current store conditions, inventory, staffing, and opportunities to improve working capital. Todd Vasos responds, inviting Kelly to add any additional insights.

The company reports significant progress in improving store conditions, with 70% of stores currently meeting high standards and aiming for 80% by 2025. This improvement is attributed to strategic leadership changes and a focus on execution. The company has also managed to reduce inventory while increasing stock availability and maintaining positive sales, which has positively impacted working capital, cash flow, and debt reduction. They plan to pay down maturing debt early in 2025 using cash.

The paragraph is a transcript of a conversation from an earnings call. Todd Vasos and Kelly discuss the company's plans for inventory optimization through 2025, which includes reductions in SKUs. Seth Sigman from Barclays asks about the long-term margin goals of 6% to 7% and whether the approach is conservative, considering investments and early pressures in 2025. Todd Vasos responds by emphasizing the company's commitment to balancing customer service, employee and shareholder needs, and striving to exceed previously set goals. He suggests confidence in the company's strategy, viewing it as the right anchor point moving forward. Joe Feldman from Bank of America asks about the competitive environment in 2025, but Vasos's specific response to that question isn't included in the paragraph.

In the paragraph, Todd Vasos discusses the competitive retail market and the impact of other stores closing on his company's strategy. He highlights the potential opportunities from competitors like Party City closing, allowing his company to adjust inventory and attract customers who need new shopping options. Vasos notes that drugstores have been significant contributors to his company's market share growth in both consumable and non-consumable goods. He emphasizes the importance of maintaining strong customer satisfaction to keep customers returning, indicating an increase in customer interest moving from Q4 to Q1.

The paragraph discusses Dollar General's delivery expansion strategy, aiming to increase from 400 stores to 10,000 by the end of the year, particularly focusing on serving small-town rural America with delivery times under an hour. The company highlights the success of the initial 400 stores, noting larger basket sizes compared to in-store shopping. The Dollar General Corporation Media Network is identified as a key component in this strategy, increasing visibility of their digital tools and enhancing partnerships with vendors. The company is optimistic about the potential revenue impact of their media network, which is integrated into their long-term financial plans.

This summary was generated with AI and may contain some inaccuracies.