Dollar General invests in major expansion
Dollar General may have lost out to Dollar Tree in its bid to acquire Family Dollar, but that’s the only place the company’s management plans to lose to its rivals. The largest dollar store chain in the U.S. has announced plans to add roughly 1,900 new stores over the course of the current and next fiscal years, bringing its store count to more than 14,000.
“Dollar General has a powerful strategic plan that enables us to drive both the top line and bottom line to deliver strong financial returns as outlined in our growth model over the long-term,” said Todd Vasos, Dollar General’s CEO, in a statement. “With strong cash flow and an efficient capital structure, we believe that we have a compelling opportunity to invest for growth while also returning cash to shareholders through consistent share repurchases and anticipated quarterly dividends.”
The chain plans to add 900 new stores during the current fiscal year while remodeling or relocating 875 others. Next year, Dollar General will open 1,000 new stores while remodeling or relocating 900. The chain, which posted a same-store sales gain of 2.2 percent in the fourth quarter, projects net sales to increase between seven and 10 percent this year while earnings per share is expected to improve between 10 and 15 percent.
Dollar General recently went public with its test of a new urban concept store. The locations, which measure around 6,000-square-feet, occupy about 20 percent less space than the typical Dollar General. So far the chain has opened about 30 of the new stores with plans to add another 80 during fiscal 2016.
Speaking earlier this month on a conference call with analysts, Mr. Vasos said, said the test stores were producing higher sales per square foot than the chain’s standard format stores, which was essential because they were more costly to operate based on their location in densely populated markets.
“By eliminating less productive product segments and adding or expanding product departments to meet the needs of our urban customers, we believe this smaller format store will allow us to have higher capture rate per site selection,” he said.
- Dollar General Provides Outline of Strategic Plans to Deliver on Its Growth Model; Company Announces Plans to Accelerate New Store Openings to 1,000 in 2017 – Dollar General Corporation
- Dollar General to add 2,000 stores in two years – The Tennessean
- Dollar General to Add Nearly 2,000 Stores by Fiscal 2017 – The Associated Press/ABC News
- Dollar General rolling out smaller prototype – RetailWire
Photo: Dollar General
DISCUSSION QUESTIONS: How long do you think Dollar General and its rivals will be able to keep up the pace of new store openings? How do you see Dollar General and other dollar stores evolving in the years ahead?