Dollar General Plans to Open 1,000 New Stores in 2020

For 2020, Dollar General expects to open 1,000 new stores, remodel 1,500 stores and relocate 80 stores, representing nearly 2,600 real estate projects in total, for an average of seven projects per day as the retailer continues to deploy capital in these high-return investments.

Dollar General Corp. today reported strong results for its 2019 fourth quarter and fiscal year ended Jan. 31, 2020, with same-store sales increasing 3.2% for the quarter and 3.9% for the fiscal year — the retailer’s 30th consecutive annual increase for same-store sales.

Fourth-quarter net sales increased 7.6% to $7.2 billion, with fiscal year net sales increasing by 8.3% to $27.8 billion. This net sales increase included positive sales contributions from new stores and growth in same-store sales, modestly offset by the impact of store closures.

“We are very pleased with our fourth quarter results, capping off a strong year of performance across the company,” said Todd Vasos, Dollar General’s chief executive officer. “Our full-year results were highlighted by double-digit diluted EPS growth, as well as our 30th consecutive year of same-store sales growth. During the fourth quarter, we delivered a healthy 3.2% increase in same-store sales, as well as strong margin performance. In addition, we executed well across many fronts, including our operating priorities and strategic initiatives.

He continued, “Our value-and-convenience proposition continues to resonate with both new and existing customers, and our unique real estate footprint remains a competitive advantage. As we enter 2020 from a position of strength, we will continue to keep our core customer at the center of all we do, while remaining steadfast in our efforts to deliver long-term shareholder value.”

During an earnings call with analysts Thursday morning, Vasos took a moment to discuss the impact of the coronavirus outbreak on Dollar General. “As compared to some retailers, our direct imports sourcing exposure is relatively limited,” he noted, “although many of our domestic vendors also source from other countries. We have limited insight into the extent to which our business may be impacted by this outbreak and there are many unknowns, but we currently do not anticipate a material impact on fiscal 2020 results from anything that we have experienced to date. Of course, we are continuing to monitor the events closely.”

John W. Garrett, executive vice president and CFO, added, “At present, although we anticipate delays on certain goods originating in China, we do not anticipate a material impact on our business or fiscal 2020 financial results and have not taken any such impacts into account in our guidance.”

Like most retailers, Dollar General said it has seen a stock-up phenomenon happening over the last two weeks, accelerated into this week. “I’m really proud of our store teams with the additional volume, how they’ve taken care of our customers and our supply chain teams making sure that we have stock in the store for those customers that come in,” Vasos said. “It is our hope, as we move through this, we’re able to satisfy the customer need, as they continue to shop with us. We’re watching it closely as well because, like most stock-ups, there’s always a backside to this, as we continue to move through the next few weeks with the hope that this virus will diminish over time, and obviously we’ll see the back end. But we’ll keep everybody posted as we move forward. Our goal internally here again is to ensure we deliver for our core consumer.”

Initiatives for 2020

For 2020, Dollar General expects to open 1,000 new stores, remodel 1,500 stores and relocate 80 stores, representing nearly 2,600 real estate projects in total, for an average of seven projects per day as the retailer continues to deploy capital in these high-return investments.

Turning to DG Fresh, which Vasos described as a “strategic multiphase shift to self-distribution of our frozen and refrigerated goods,” he noted that these goods currently represent approximately 8% of Dollar General’s total sales. “The primary objective of DG Fresh is to reduce product cost on our frozen and refrigerated items by removing the markup paid to third-party distributors, thereby enhancing gross margin,” Vasos said during the call. “And while, as expected, this cost of goods benefit was more than offset by initial startup costs and associated operating expenses in 2019, we continue to be very pleased with the product cost savings we are seeing. In fact, we expect DG Fresh will be accretive to operating margin in 2020 as the benefits begin to exceed associated expenses and grow in the years ahead as we continue to scale this transformational initiative.”

What's your opinion?

More ,

%d bloggers like this: