Dollar General (NYSE:DG) is putting the harsh winter behind it and pressing ahead with plans to open 700 new stores as sales trends improve.
The company released first quarter results for the 2014 fiscal year, during which time sales improved slightly, 1.5 percent, thanks to growth in consumables. Harsh winter weather continued to negatively impact business, as did heightened competition and continued economic issues. In spite of these conditions, Dollar General saw trends improve and the company believes it's on track to meet full year sales and earnings goals.
"We continue to grow both our customer traffic and average transaction amount as our merchandising initiatives reinforce our affordability and value messaging. Sales trends began to improve in April and have continued to gain momentum," said Rick Dreiling, chairman and CEO. "We are pleased to see that our merchandising strategies are gaining traction with a strengthening of sales in both consumables and non-consumables in our second quarter to date. Looking ahead, we are confirming our sales and EPS guidance for the year, and we are confident that we have the right strategies to drive long-term shareholder value."
Dollar General expects total sales for the year to increase 8 percent to 9 percent over the 2013 fiscal year, with same-store sales expected to increase 3 percent to 4 percent.
The retailer is moving ahead with plans to open 700 new stores in 2014 and opened 214 stores during the recently completed quarter. In addition, Dollar General will relocate or remodel approximately 500 units and has 400 stores scheduled to receive limited remodels under its new "lifecycle remodeling" program.
Lifecycle remodeling refreshes some of the chain's smallest stores rather than relocating them to larger spaces simply by narrowing down assortment to the most productive merchandise. The stores in the lifecycle program are between 5,700 square feet and 6,500 square feet, compared with 7,200 square feet at a conventional Dollar General store and 16,000 square feet at a Dollar General Market.
The program is yielding significant cost savings, Dreiling said during a call with analysts in March. "It's costing us about 30 percent less to remodel them, and they're generating a return that's 25 percent to 40 percent higher."
-See this Dollar General press release
Dollar General unveils lifecycle remodeling program for smaller stores
Dollar General reports Q3 earnings increase of 14%
Dollar General opens first fuel station
High income consumers shop at dollar stores
Survey: Sears, RadioShack, Dollar General and Dillard's are the worst retail employers