Good morning. My name is Hope, and I will be your conference operator today. At this time, I would like to welcome everyone to the Dollar General First Quarter 2016 Earnings Call. Today is Thursday, May 26, 2016. [Operator Instructions] This call is being recorded. [Operator Instructions] Now I would like to turn the conference over to Ms. Mary Winn Pilkington, Vice President of Investor Relations and Public Relations. Miss Pilkington, you may begin your conference.

Thank you, Hope, and good morning, everyone. On the call today are Todd Vasos, our CEO; and John Garratt, our CFO. After our prepared remarks, we'll open up the call for questions. [Operator Instructions] Our earnings release issued today can be found on our website at dollargeneral.com under Investor Information, Press Releases. Let me caution you to that today's comments will include forward-looking statements about our expectations, plans, predictions and other nonhistorical matters including, but not limited to, our fiscal 2016, 2017 store growth, fiscal 2016 initiative, capital allocation strategy and related expectations, our long-term financial growth model and future economic trends or conditions. Forward-looking statements can be identified because they are not statements of historical facts and use words such as outlook, may, should, could, believe, anticipate, expect, looking ahead, focused on, estimate, forecast, goal or intend, and similar expressions that concern our strategies, plan, intentions or beliefs about future occurrences or results. Important factors that could cause actual results or events to differ materially from those projected or implied by our forward-looking statements are included in our earnings release issued this morning, our 2015 10-K filed on March 22, 2016, and our most recent 10-Q filed today and in the comments that are made on this call. We encourage you to read these documents. You should not unduly rely on forward-looking statements, which speak only as of today's date. Dollar General disclaims any obligation to update or revise any information discussed in this call, except as follows: we previously outlined [Audio Gap] model and certain 2016 financial guidance in our press release issued on March 10, 2016. As noted in that release, we plan to update our diluted EPS guidance only if we no longer reasonably expect diluted EPS to fall within the 10% to 15% range outlined in the growth model, and we generally do not intend and specifically disclaim any duty to update our expectations regarding where in the range of guidance net sales, same-store sales or diluted EPS may fall or to update any component of the growth model other than diluted EPS as just referenced. As we noted in that press release, we also do not intend and specifically disclaim any duty to update our dollar range for expected fiscal 2016 capital expenditures unless otherwise required by applicable securities laws. Our comments today will be consistent with the approach we just outlined. We will not discuss and will not answer any questions regarding the quarter's results as related to the long-term growth model or the specific 2016 financial guidance first given on March 10, 2016. However, due to our accelerated store growth plans during this call, we are discussing our square footage growth targets for 2016 and 2017. Now it is my pleasure to turn the call over to Todd.

Thank you, Mary Winn, and welcome to everyone joining our call. As we noted in our press release, we had a very good start to the year and are pleased with our results. For the first quarter, the team executed well as we were keenly focused on ensuring the effectiveness and efficiency of every aspect of our business. Let's recap some of the highlights for the first quarter of 2016 as compared to the 2015 period. First quarter sales increased 7% to $5.3 billion. We delivered same-store sales growth of 2.2% for the quarter, and in an environment where many retailers struggled, we delivered good performance. Same-store sales growth was positive for both consumables and non-consumables, with growth stronger across our consumable categories. Growth in non-consumables was due to seasonal and home products. For the 33rd consecutive quarter, we increased both our customer traffic and average ticket year-over-year. Gross margin expanded by 16 basis points to 30.6%. We leveraged selling, general and administrative expenses by 26 basis points as our zero-based budget initiatives started to contribute to our results. Operating profit increased 12% with operating profit margin expansion of 42 basis points. Net income in the first quarter increased 17% to $295 million. For the quarter, diluted earnings per share increased 23% to $1.03, including a $0.03 benefit from a lower tax rate, which John will discuss later. During the quarter, we returned over $300 million to shareholders through the repurchase of 2.7 million shares of common stock and the payment of a quarterly dividend. In the first quarter, we made notable progress against our key initiatives for 2016. As I will discuss in more detail a bit later in the call, the team has done a great job of developing compelling initiatives across merchandising, store operations and supply chain to help drive our business in 2016 and for the long term. Additionally, we continue to grow transaction and item units in syndicated share data for the quarter. In the most recent syndicated data, we experienced relatively consistent mid-single-digit growth in both units and dollar share for the 4-, 12-, 24- and 52-week periods. Now I'd like to turn the call over to John to go through more details of the quarter.

Thank you, Todd. Good morning, everyone. As Todd has taken you through the highlights of our first quarter, I'll share more details on the rest of the financial results, starting with gross profit. Gross profit for the first quarter was $1.6 billion or 30.6% of sales, an increase of 16 basis points from last year's first quarter. The most significant drivers were higher initial inventory markups and reduced transportation costs, partially attributable to lower fuel rates. This was in part offset by a greater proportion of sales of consumables, which have a lower gross profit rate than non-consumables, increased inventory shrink and higher markdown. SG&A expense decreased by 26 basis points over the 2015 quarter to $1.1 billion or 21.5% of sales in the first quarter. The majority of the SG&A decrease was due to lower utilities costs, administrative payroll, incentive compensation, travel expenses, workers' compensation costs and advertising costs as well as higher volume of customer cash-back transactions resulting in increased convenience fees paid to the company. Partially offsetting these items were our retail labor investments and occupancy costs, each of which increased at a rate greater than the increase in sales. Our zero-based budgeting initiatives contributed to our robust results. This process leverages our cultural heritage of thrift and further solidifies our leadership as a low-cost operator. We implemented zero-based budgeting proactively and thoughtfully as we developed our fiscal 2016 budget using 3 filters: the customer, our strategic priorities and risk mitigation. The team is now actively working on a pipeline of additional future savings opportunities across the company. Moving down the income statement. Our effective tax rate for the quarter was 35.4% as compared to 37.7% in the first quarter last year. As we detailed in our press release, the effective income tax rate was lower in…

Thank you, John. Now let's turn to an update on our initiatives for 2016. Our customers are the starting point and center of all we do at Dollar General. We recently did the first recut of our consumer segmentation in 4 years to provide shopper insight that impact decisions across the entire company. This research helps us know who our customers are, where they shop, how they shop, what they buy, how much they spend, and most importantly, their attitudes and their behaviors. The exciting news is that we are improving our core customer productivity and retaining our trade-down customer, all while we expand our reach. New segments shopping with us include an older male middle income consumer and a millennial female shopper. The millennial shopper is a segment that I was particularly excited to see emerge as a core consumer for DG as this segment is so important to the future of retail and Dollar General. Today, she represents about 12% of our shoppers and 24% of our sales. On average, she is shopping our stores about 3 times a month. One of her money-saving strategies is to utilize technology like our Dollar General digital coupon app to make lists, find deals and save money. She wants healthy food items and likes to be on the cutting edge and try new products. While national brands are important, she also trusts our private brands. She utilizes the entire DG store as a way to stretch her budget. These insights will help us serve her even better going forward as we strive to ensure she becomes an even larger consumer segment for us over time. I believe our deep and actionable understanding of our consumers is a core strength. As we implement and refine our initiatives, we have incorporated this knowledge…

Thank you. Operator, we'll go ahead and start with the first question, please.

[Operator Instructions] Your first question comes from the line of Stephen Grambling with Goldman Sachs.

I guess, first, can you maybe quantify the potential impact from the recent minimum overtime ruling and how you can potentially mitigate that specifically?

We are still evaluating right now all the different options. As you can imagine, we've been working very, very diligently over the course of the last few months in anticipation of the regulation. And now that we have the actual regulation, we're actually refining that so that we can insure that we, as I indicated in my prepared remarks, really take care of our employees, our customers and our shareholders alike. But the one good thing that you know about Dollar General, particularly, and retail in general is that we have a lot of levers at our disposal, Stephen, to really take a look at how we can mitigate a lot of what may be an expense here to us. But again, we're looking at it and we're going to do that exact right thing for our employees, customers and our shareholders. Stay tuned, we'll give you more clarity as we get a little closer to December 1.

Okay. And then, I guess, on the guidance, I know that you had said that the first quarter was supposed to be kind of the weakest growth rate of the year due to the comp comparison. Given the strong start to the year, should we be just assuming that you could be that much better in the back half given the cost control?

Well, I'll start by saying we're very pleased indeed with the Q1 results as we delivered on all elements of the growth model. But bear in mind that growth model is a long-term model and what we're really focused on is putting the actions in place to drive that model for the long term, and we have a lot of great actions in place. We feel great about real estate. We're on track to open 900 units this year and over, as Todd mentioned, over 50% full the pipeline to open 1,000 next year. And the great thing here is the economics are as compelling as ever. We continue to see our IRRs exceed our 20% target, continue to see a payback less than 2 years. Sales are indexing above expectations. As we mentioned at our Investor Day, a lot of exciting things with sales comps in terms of product assortment, store formats, operating initiatives that will be fully -- many of them will be fully implemented as we get into the back half of the year and should gain momentum. And then on operating profit, as evidenced by the Q1 results, the team is very effectively managing all the levers to deliver that 42 basis points of expansion with growth in both gross margin and SG&A. And the newest lever, zero-based budgeting, we're really seeing that start to contribute very rapidly and really become ingrained in the fabric in which we operate here. And then lastly, we feel great about the amount of cash that this business continues to kick off, allowing us to reinvest in this low-risk, high-return new unit growth and the structure to support it, while continuing to pay a competitive, and over time, growing dividend as well as consistent robust share repurchases. So the model is working great. We think that's evidenced by the Q1 results and feel great about the long-term impact of this and the ability to continue improving it.

That's all very helpful. If I can sneak one other more specific one in there. Can you just help us size the global sourcing opportunity that you referenced in gross margin, maybe giving us a full bit of sense for what that percentage is now that's being sourced globally direct? And what kind of categories may be underpenetrated?

Yes, when you look at it, Stephen, we still have a pretty large opportunity for our global sourcing efforts and we've been working very diligently over the last many years. We just opened our -- an office, a new office in Mainland China. We continue to open satellite offices, really, all over the globe, and the opportunity is still a very big. I could tell you that when we started this journey 8 years ago to really look at exactly how much opportunity we had, we always weighted that depending on also where the consumer was going. And we still think that the consumer is looking for national brands in a lot cases, but also great value in our private brand offerings, which really goes toward that -- goes toward that import piece. So we think we still have a tremendous amount opportunity, and we're working that each and every day overseas. And we feel very, very good about that as we go into the rest of this year and then into the long haul here.

Your next question comes from the line of Peter Keith of Piper Jaffray.

Just circling back on the overtime rule change question. I guess, if you're giving a pay increase across your store manager base, we would get some back of the envelope math of about $90 million. I guess, just to size that up, is that where we are going to shake out? Or what specific moves would you be able to take to perhaps mitigate that impact as you look out to 2017?

Yes, Peter, that's a great question. As we look at it, and we've done, as I indicated, many different scenarios, and I can tell you that none of those scenarios are even close to that $90 million, substantially less. And that's exactly what we're working on now is to get that impact down even further and looking at every lever that we have in our business to make sure we can lessen that impact. But we think it's much, much less than the number that you just indicated and with a big opportunity to lower it even further. The great thing about this business, we have a lot of flexibility. As John indicated, we're hitting on all of the elements of the growth model. And we feel that, in fact, as we look out longer term, we definitely have the ability to offset a lot of the pressure that this may put on that SG&A line.

Okay, very good. And then to be sticking on the SG&A topic. So the leverage was abnormally good in Q1. You've mentioned you kind of came in below your 2.5% to 3% leverage target. Were there some dynamics in Q1 that were abnormal or onetime in nature? Or are you perhaps going to see some continuation of this through the year?

Well, I'll start by saying we feel great by the progress of zero-based budgeting thus far and we're very pleased to be able to leverage SG&A 26 basis points at that comp, which, yes, as you indicated, was even better than the 2.5% to 3% that we'd indicated previously, which had come down from the previous 3.5% level. With that said, there were some -- there was some timing in there, there was some benefit from mild weather that helped, but -- utilities. But all in all, we are off to a great start on zero-based budgeting. It's really taking hold, it's contributing very quickly, and I'll say it's also really becoming ingrained in the fabric of how we operate. And I see people of all levels of the organization now looking at everything they do through the lens of zero-based budgeting and the filters we've talked about, with the customer, our strategic priorities, risk management and looking at things in terms of return on investment. So I'd characterize it by very strong contribution from zero-based budgeting. We feel good of our ability to continue to leverage at the rates we've mentioned before going forward and feel the team is well on its way of building a pipeline of future savings to sustain at that. So we feel we're in a great spot on zero-based budgeting as evidenced by the results.

Your next question comes from the line of Dan Wewer of Raymond James.

During the past year, Dollar General has successfully reduced shrink. At the Investor Day, you had called that out as one of the potential sources of gross margin rate going forward, but it sounds like shrink went in the wrong direction in the first quarter, and typically, that's never just a one-quarter event when you see that reversal in direction. Can you talk about what's changed with the shrink accrual?

Yes. So as you look at shrink, and I do want to say, over the long haul, we feel good about where we're headed with shrink and all of the initiatives that we have in place to continue to reduce our shrink, and it is our #1 gross margin opportunity. In saying that, though, we did see a little bit of an uptick in Q1, and the majority of it was really due to our on-shelf availability efforts, to be honest with you. And we like the trade-off right now. We're not happy with it, we're looking at ways to mitigate that exposure on shrink. But what we felt that was even more compelling was to make sure that the customer, when they came in our store, had the product they needed on the shelf to purchase, and that was really the key driver. But rest assured that our operating team and our merchant marketing teams are working very, very hard, along with supply chain, to reduce that shrink number as we go forward. We still have a lot of levers to pull, still putting a lot of defensive merchandising tools and other tools for our district managers and our store managers to be able to monitor shrink even closer to the actual event. So we feel good about the long term, but still need to continue to work hard. And I dare to say that in the years to come, we'll always be talking about shrink, because that's just the nature of this business.

And this is a follow-up, back at the Investor Day, the long-term growth algorithm had a -- one scenario where same-store sales could be as strong as 4%. When you look at the timing of the market share initiatives revolving around the customer segmentation work, what is the realistic time frame from when that type of same-store sales growth could become visible? Is that a 2017 or a 2018 time line?

Yes, Dan, when you -- when we looked and we put this algorithm together, we felt very confident over the long term that we could stay within those guardrails of 2% to 4%. And the initiatives that are just now rolling out in 2016, the majority of them are just now starting to roll out and will continue to roll out in Q2 and into Q3 and start to come to fruition even greater in the Q3 and Q4. And then as I indicated, we're further along on our strategic planning right now than we've been in the last 8 years here. And that gives me great solace that as we continue to move into '17 and beyond that there'll be a very robust initiative going forward to drive that top line. So we're very confident in the 2% to 4%. And there will be ebb and flow in there, but we feel that we have all the initiatives we need to make sure we deliver that.

I mean, do you think the current economic environment for your core customer is sufficient for Dollar General same-store sales to get in the, let's say, 3.5% to 4% rate? Or does some macro improvement, will that be needed to get to that kind of objective?

Yes, when you look at our core consumer today, she's always under pressure as I indicated. Her income and her spending rates are usually under pressure. The great thing about our model is we do very well in either of those 2 scenarios, where she has a little bit more money, she spends a little bit more on those nonconsumable goods. And when she doesn't have as much, she may pull back there, but then utilizes us more on consumable and everyday staples that she knows she can get at an everyday low price. And the great thing that just came out of the segmentation work, Dan, that we're really encouraged about is this millennial shopper that's already making up about 24% of our sales line. And as we continue to learn more about her over time and be able to service her better, we, again, feel confident on that sales line and be able to deliver that as we move forward.

[Operator Instructions] Your next question comes from the line of Michael Lasser with UBS.

It was mentioned that the weather provided a benefit to the expense line during the quarter. Do you think that the weather provided a benefit to the sales line as well? Maybe you could just talk about the flow of the quarter, given all the noise and volatility that we've heard out there.

Yes, the cadence of the quarter really worked exactly like we thought it was going to work. With the shift of Easter into the second period March out of the third, which was April last year, obviously, March was a better month than April. And -- but when you looked at February, March and April combined, the cadence was exactly the way we had anticipated it coming into the fiscal year. So while there's always weather and different phenomenons that happen, we've got a lot of great initiatives here to continue to try to ensure that we capitalize on whatever those phenomenons are, and we felt that we did a pretty good job here in Q1.

And Todd, as my follow-up, Walmart talked about beginning to implement its price investments, and that's going to accelerate over the course of the year. So what have you seen in the marketplace as far as pricing and promotions? And how are you prepared to respond?

So as we look at pricing overall, macro, so taking into account mass, grocery and drug, we see still a very rational pricing that's happening in the marketplace today. In saying that, there's always retailers that at times will try different things. But the one great thing about our robust pricing model that we have here, we check prices every 2 weeks on our top items. And we also, every quarter, check it on the full book so we know exactly where we stand. And we, today, feel very confident in the where we sit on pricing, and if we see folks moving, you'll see us move because this is all about ensuring that we continue to drive units out of our stores, and of course, drive traffic into our stores. So anywhere that we may see where we need to be sharper on price, we'll take that action. and the great thing about Dollar General is, again, we've got the levers to enable us to do that. And so when we look at this, we also look at it from the standpoint that our vendors help us a lot as well. We're in the top 10 of all CPG companies out there, and quite frankly, we're in the top 5 of the majority of them. And that gives us great partnership with our vendor community that enables us to insure we're right priced any time we need to be.

Just to clarify that thought. Does that mean you haven't seen any major changes? And if, do you think you'll get support to match those changes from the vendor community?

I didn't say we didn't see anything. I did say that we have taken -- we will continue to take appropriate action when we do see it, and rest assured we have and will continue to do that if we see any retailer moving on price that we feel that our consumer, because she looks to us to be a leader there as well, and we'll make sure we do everything we have to do to get keeping units moving through the box.

Your next question is from the line of Dan Binder with Jefferies.

It's Dan Binder. I had a couple of questions on -- first, on the labor investment that you've been making all through last year. Is that -- do you feel like you're getting that payback in comps across all of the different phases that you rolled out last year? And is there any more color you can put on how that comp differential looks versus the rest of the base? And then lastly, if there are more stores identified to get that labor investment?

Yes, Dan, we watch this very closely. And as you know, Dollar General pretty well, we don't do anything that doesn't have a return attached to it. And we don't just shelf it after we roll it out, we really monitor and watch. So what I could tell you is that we're very pleased on all levels from our price or -- excuse me, our labor investments into these stores. Now over the time, we have, over the course of the last few months, we've taken some stores off of that and we've added additional new stores onto it depending on those returns. And we'll continue to do that, so we'll always continue to add new stores if we see the need and the benefit that will be there. But we also will take stores off if we see that the benefit is not meeting or exceeding our expectations or they don't need it any longer for whatever other reason. But we continue to really like what we see here and looking at ways we can continue to expand that as we go forward.

And just one other question on the small formats. As you look out to markets that support it, what do you think the small format opportunity looks like longer term? And when you look at your broader store expansion plans, how many markets do you look at as effectively one-store markets, where there'd be room for, essentially, Dollar General and nobody else given the size?

Yes. So we've -- this is really new for us still, right. We've got 45 stores up and running. We've got approximately 80 planned in total to be opened by the end of the fiscal year. And so as you can imagine, we are out looking now on, because we're very happy with what we see so far, is where those next stores will be as we go into '17 and beyond. But again, because of the nature of it, one being in these more metropolitan type areas, and then secondly, in these very rural areas, we got our arms around pretty close about how big that is. We're not really going to say exactly how big it is, because what we're doing is making sure that we can refine the model appropriately with, again, only 45 open, but we've got a good idea. The important thing here is we are concentrating a lot, though, in those rural areas, where there is only room for one store. And that's why you see us moving very quickly in a lot of cases with our growth of 900 stores this year and up to 1,000 next year. And a lot of those areas are in these towns or even crossroads that can only support one retailer. And I sure would rather it be Dollar General and that's how we're going about this. So we're moving pretty quickly there and feel good about where that pipeline is for 2017 already.

Your next question comes from the line of Ed Kelly with Credit Suisse.

So I just have a follow-up for you on the rate [indiscernible] and I guess, what I'm trying to figure out is how do we think about cost leverage point as we make it through at the end of the year? And do you think you'll be able to achieve 2.5% to 3% target despite this? Or should we plan for some temporary pressure as we think about our model?

Ed, it's Mary Winn. We had a real hard time understanding your question. Do you mind repeating that?

Yes. Sorry about that. I just have a question, a follow-up question on the rate structure. And my question is as this headwind grows sort of at the end of the year, how do we think about your ability to achieve the 2.5% to 3% leverage point? Is that something that you're going to be able -- do you think you're going to be able to manage through as we look at next year? Or as we think about our model, should we be planning on some type of temporary pressure, even if it's not usually material?

Yes, what I would say is that in terms of the FLSA, that's new breaking news, but conversely, we had the tax benefit that wasn't contemplated when we spoke with you last. So we continually have puts and takes. And I point back to the number of levers we have to -- and the track record we have of successfully managing through and mitigating the various puts and takes as we move through.

Okay. And then just maybe one quick follow up for you. Can you just maybe give us a little insight in terms of what you're seeing from the consumer at this point? We've seen that at Walmart, that -- you know the big box stock trip seems to be doing okay, but others have complained around fill ins. Just your general thoughts about what you're seeing out there today in your business from a traffic standpoint.

Yes. When you look at it, the consumer is probably about the same as they were coming out of Q4, to be honest with you. We're seeing about the same trends. There was no doubt that she is still watching what she spends. But again, that's the nature of our core consumer, and she is always looking for the ability to make sure she can deliver to her family at the lowest price. And so that's what we're concentrated on mainly is to ensure that we've got the right item at the right price at the right time for her, and we've been delivering that. But the consumer right now, overall, I would tell you, back to work for the most part, probably feeling a little bit more confident, but -- and spending at little bit more on her nonconsumables, and we're still seeing our nonconsumable growth but still being cautious. So we look at that as an opportunity for us, especially for fill in. Because if she is cautious, that stock-up trip is not always in her eyesight, if you will, and at times, she maybe a little bit more reticent to stock up and a little bit free-er to fill in. And again, with our offering and our prices, we offer a compelling reason to come to Dollar General when she does that.

Your next question comes from the line of Vinny Sinisi of Morgan Stanley.

I wanted to go to the zero-based budgeting. You guys mentioned that you are certainly starting to see some nice traction so far. Could you give us all maybe just a bit more color in terms of kind of the bigger learnings thus far, where the opportunities have come from? Then I think, John, you mentioned kind of seeing more opportunities going forward. If you can give us a little more sense around that?

Sure. I think, one of the biggest learnings is just the additive effect it has is really people embraced this mentality. I think we've got everybody very thoughtfully looking at everything they do. They're spending through those filters of the customer of the strategic priorities of risk mitigation. It really focuses our efforts and focuses our resources towards the highest returning mission-critical activities. And there's a lot of power to that and it really has a compounding effect. In addition, we have teams, we have 23 different cost packages, teams, with senior-level folks on the teams, cross-functional engagement, interaction. And we have a pretty rigorous routine now; monthly meetings with the senior leadership team, where we go deep and wide through all the costs. And with that increased learning, with that sharing across the company, it really drives best practices that feeds on itself. And we're going after costs. In process improvement, we're going after costs. In efficiencies, we're going after costs in just good old-fashioned prioritization of spending, working very closely with procurement to go deeper and wider on those activities. So it really cuts across the entire P&L. It really is the power of the teams working together to uncover. We've always had good cost management here and it's been a strength of ours, but with this zero-based budgeting, it really allows us to go that layer deeper to get those costs on the baseline that are hard to bring out and really drive an ownership type of mentality where it's not a use it, lose it budget that rolls ever but really everything has to pay for itself.

Okay, that's helpful. And then maybe just one quick follow-up. You mentioned quite a bit about the different categories expansions, including a private-label testing, some more perishables. How should we think about, like, is there anything notable in terms of an overall assortment standpoint, in terms of some of these new things that are going in? Is anything notable coming out? How you're shifting the shelves around? Anything to call out there?

When we -- the nice thing about Dollar General and our category management system that we put together years ago, we have a very robust category management process that looks at each year every single category and then every item -- with only 10,000 SKUs, it's a little easier, every item within those categories, and we adjust each and every year, depending on the -- where the consumer is going, whether it's her economic condition or her attitude and how she feels about her economic condition. We're able to move left and right, if you will. Now in saying that, at times, we do need reduce items inside of our store and reduce square footage on some categories and then increase others. So this time, this year, we really worked hard to increase our perishables, our health and beauty areas, our party and stationery areas. And in many cases, a lot of the reductions were coming out of a mix of both consumable and nonconsumable areas. I think I gave an example before, but right now, the -- a lot of the dry cereal business is in a secular decline. So what we do there is we reduce some square footage so we can increase square footage of other dry grocery areas. So we're very attuned to what is happening in the marketplace, and the great thing about us is we're very nimble and we're able to take advantage of that very quickly.

Your next question comes from the line of Alvin Concepcion with Citi.

I'm wondering if you could talk about second quarter same-store sales trends today. It sounds like there was a lot of noise in April with Easter shift and weather, so I'm wondering if you can give us a sense of how things are currently working. And related to that, I think you've previously expressed confidence that you can accelerate comps to the 3% range for the year. Is that still your view?

Again, when you look at it, the quarter ended up exactly the way we thought it would from a shape perspective, exactly the way we planned it. And again, we really feel confident long term, and we look at this long term, that in fact we have the initiatives in place and we have the strategic planning already moving forward to ensure that we can keep those comps moving as we go through this year and in the years to come. So again, we're confident in that 2% to 4%, that guard rail that we've put up, and we want to just continue to move through that.

Very good. And then unrelated to this, I'm wondering if you could give a little bit more color on the produce test in 160 locations, just some more color on the strategy there? Wondering if you can give us a sense to the price points relative to discounters or even conventional grocery? And if you could, I mean, what kind of margin profile did you construct for that relative to the overall consumables category?

Yes, so when we look at it, keep in mind, today, we've got fresh fruits and vegetables in about 160 of our market stores today. And so we've been in this business for a while. We understand it. We know what the sales and margin levers look like there. In these stores that we're talking about, these 160 or so, and we internally call them Dollar General Plus stores because they have a larger expansion on coolers, on perishables already, but now the introduction of fresh fruits and vegetables will be a nice addition. But keep in mind, this will be just limited amount of SKUs. So this will not be like a market store, where we have a lot of different SKUs. This will be a core 10, 12-item type of an arrangement right now, where some of the basics, right, apples, bananas, oranges, onions, tomatoes, those types of things. But really, what [Audio Gap] to do is address what that consumer is looking for. They're looking for fresh opportunities. And for us to be able to give her that at a very convenient time in her shop, and again, we're very convenient based, we think it's the right thing and we're able to leverage our market stores and the cost profile we have from those stores into these. So we feel good about the where our costs will be, retails will be and what our profitability will be on that. It will be a small piece of the business, though. This is not meant to be a big driver of sales, but it's meant to be a driver of traffic.

So we've hit the top of the hour, so I think we're going to end the call now. But thank you very much for your interest in Dollar General. Both Matt and I will be around to handle any calls, so just please -- looking forward to see you soon, and thank you for your interest.

Thank you. That does conclude today's conference call. You may now disconnect.