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Dollar General (DG) to Pay $50M More as Appreciation Bonus

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Several companies are paying bonuses with respect to acknowledging the front-line employees’ efforts in the wake of the coronavirus pandemic. In fact, these companies are supporting their associates in such trying times. Treading the same path, Dollar General Corporation (DG - Free Report) has also announced such actions.
Dollar General unveiled plans to pay nearly $50 million in additional appreciation bonuses to the eligible frontline associates in fourth-quarter fiscal 2020. The discount retailer is doubling its planned bonus investment for the back half of the year, thus cumulatively bringing its commitment to about $100 million for the third and fourth quarters. In fact, management expects awarding nearly $173 million to store, distribution center and private fleet staff during the current fiscal. Management had earlier said that it projects an investment of up to $123 million as appreciation bonus to frontline employees in fiscal 2020.

Dollar General’s CEO, Todd Vasos, said, “To demonstrate our ongoing gratitude and support for our employees directly serving our customers and communities during this pandemic, we are proud to double our initial plans for second-half bonuses by awarding an additional approximately $50 million to our frontline team members."

We note that the company invested approximately $13 million in employee appreciation bonuses during the second quarter of fiscal 2020, taking the total to about $73 million through the end of the quarter.

DG’s Performance

So far this year, shares of Dollar General have risen 34.8% and outpaced the industry’s 19.7% rally. The Zacks Rank #2 (Buy) stock may scale new highs with solid prospects, brand recognition and strategic endeavors such as the new store concept, likely to act as propellants. We believe better pricing, private label offering, inventory management and merchandise initiatives should drive sales. These, along with focus on consumable and non-consumable categories with impressive same-store sales growth, are noteworthy.

Fiscal 2019 was the 30th consecutive year of same-store sales growth for the company. Notably, the trend continued in fiscal 2020 as well. After increasing 21.7% in the first quarter, same-store sales surged 18.8% year over year during the second quarter, primarily owing to rise in average transaction amount. Consumables, Seasonal, Apparel and Home categories favorably impacted the metric. Also, in the wake of coronavirus outbreak, the company has been witnessing a healthy demand.

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