Dollar General to open 1,000 stores in 2020; tops Street with strong Q3
Dollar General Corp. on Thursday reported its best quarterly same-store sales rise in nearly five years along with increases on both its top and bottom lines.
The discount giant also announced that it plans to open 1,000 stores in 2020, up from 975 in 2019. It also will undertake 1,500 mature store remodels and 80 store relocations.
"We are excited to accelerate our real estate growth plans in 2020,” said Todd Vasos, CEO, Dollar General. “The sustained positive results we are seeing from our portfolio of real estate projects further validates our belief that our ongoing investment in high-return real estate projects, along with our strategic initiatives, is the best use of our capital as we look to continue delivering long-term shareholder value.”
Net income totaled $365.6 million for the quarter ended Nov. 1, compared to $334.1 million the year-ago period. Earnings per share increased 12.7% to $1.42, topping analysts estimates of $1.38.
Net sales increased 8.9% to $6.99 billion, beating estimates of $6.92 billion. Same-store sales increased 4.6%, driven by increases in both average transaction amount and customer traffic. The company cited growth in the consumables, seasonal, home, and apparel categories.
“The quarter was highlighted by our best customer traffic and same-store sales increases in nearly five years, as well as double-digit growth in both operating profit and diluted EPS,” said Vasos. “We continue to execute well on many fronts, while maintaining our focus on delivering value and convenience for our customers. As a result of our performance through the first three quarters of 2019 and outlook for the fourth quarter, we are raising our full-year financial guidance as we work to finish a strong year.”
The company updated its financial guidance, which includes the anticipated impact of previously implemented tariff rates on certain products imported from China, and the additional tariffs expected to become effective on December 15, 2019. It noted that its forecast assumes that it can successfully mitigate, absorb, or otherwise offset the impact of these tariffs.
For fiscal year 2019, Dollar General now expects the following:
- Net sales growth in the low 8% range, compared to its previous expectation of approximately 8%;
- Same-store sales growth in the mid-to-high 3% range, compared to its previous expectation in the low-to-mid 3% range; and,
- Adjusted earnings per share in the range of $6.55 to $6.65, compared to its previous range of $6.45 to $6.60...
Analyst Neil Saunders, managing director of GlobalData Retail, commented that Dollar General’s solid bottom line show that the chain is “successfully managing the challenge of tariffs through a combination of expense management, volume expansion, and driving a higher proportion of own-brand sales.”
"Overall, we believe this bodes well for 2020 and means Dollar General will retain its edge compared to rivals,” he said.