Dollar General to open 730 stores and remodel 875 locations in 2015; entering three new markets
GOODLETTSVILLE, TENN. -While the outcome of Dollar General Corp.'s plan acquire rival Family Dollar Stores remains unsettled, the company remains committed to organic growth. Dollar General on Thursday revealed plans to ramp up its expansion in 2015, and also enter new markets and enhance the productivity of its existing stores. The company said it expects to open approximately 730 new stores—including its first-ever locations in Maine, Rhode Island and Oregon—for a total square footage growth of approximately 6%.
In addition, the discounter plans to relocate or remodel approximately 875 stores, with a priority on what it described as " low-cost and highly productive life cycle" remodels. And site work has begun on a new distribution center in San Antonio, Texas, with shipping expected to commence in late fiscal 2015.
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On Thursday, Dollar General reported results for the third quarter that missed analysts estimates and slightly trimmed its full-year sales forecast to about 8% , from a range of 8% to 9%. The chain also said it remained committed to its bid to acquire Family Dollar, which has already agreed to be bought by Dollar Tree. Dollar General took its $80-per-share bid for Family Dollar directly to shareholders in September. The shareholders are scheduled to vote on Dec. 23 on Dollar Tree's $74.50-per-share offer. Dollar General said it will give an update on its offer ahead of the vote.
For the third quarter ended Oct. 31, Dollar General's net income slipped to $236.3 million from $237 million as it continues to be impacted by its costs related to quest to acquire Family Dollar.
Gross profit as a percentage of net sales fell 18 basis points to 30.1 percent as lower-margin consumables like tobacco and perishable products continued to make up a larger chunk of sales. Selling, general and administrative expenses rose to 21.8% of net sales from 21.4% a year earlier, which included expenses related to its bid for Family Dollar.
Revenue increased to $4.72 billion from $4.38 billion, which missed analysts' $4.8 billion expectations for the quarter.
Same-store sales growth rose 2.8%, below estimates.
“Our affordability-focused initiatives continued to gain traction with our customers in the third quarter, and our same-store sales growth of 2.8 percent reflected increases in both customer traffic and average ticket for the 27th consecutive quarter,” said Rick Dreiling, Dollar General’s Chairman and Chief Executive Officer. “We continued to grow our market share in consumables, and we are very pleased with the performance of our home and apparel categories. Importantly, we are seeing a significant step up as we start the holiday season, and we expect to achieve same-store sales growth of approximately 5 percent for the fourth quarter.
“Our affordability-focused initiatives continued to gain traction with our customers in the third quarter, and our same-store sales growth of 2.8% reflected increases in both customer traffic and average ticket for the 27th consecutive quarter,” said Rick Dreiling, Dollar General’s chairman and CEO
“We continued to grow our market share in consumables, and we are very pleased with the performance of our home and apparel categories. Importantly, we are seeing a significant step up as we start the holiday season, and we expect to achieve same-store sales growth of approximately 5% for the fourth quarter."