National dollar-store retailer Dollar General (DG -3.44%) announced Tuesday that it's providing $35 million in bonuses for all store, distribution center, and private freight fleet employees. Employees who work during a six-week period which began in mid-March will be eligible for the incentive (the plan was disclosed to Dollar General's workforce last week).
The company is rolling out bonuses after disclosing plans yesterday to hire an additional 50,000 employees to meet surging demand for household essentials during the COVID-19 pandemic. Many of these jobs are expected to be temporary; however, management noted that new employees will be eligible for the March/April bonus.
Image source: Getty Images.
Dollar General is coming off a strong fiscal year in which it increased revenue by 8% to $27.8 billion and expanded net income by 6% to $1.7 billion. For perspective, the current bonus amount of $35 million is equal to roughly 2% of last year's net profit. The actual impact on this year's net profit is likely to be much less, however, since Dollar General is fulfilling a tremendous amount of incremental sales due to the coronavirus outbreak.
The organization is reaping the fruit from its push over the last two years to ramp up refrigerated food coolers in its stores. Dollar General placed 45,000 coolers in stores in the last fiscal year alone, and plans to install an additional 55,000 coolers this year. Focusing on groceries as a traffic driver has paid off unexpectedly as home-bound food demand soars (along with demand for household essential supplies). Even after the current crisis subsides, Dollar General may be able to retain a fraction of the additional traffic over a longer time horizon. For now, though, it's simply focused on meeting demand on a day-to-day basis.
