Chain plans 900 new stores, 1,000 remodels in 2018
GOODLETTSVILLE, Tenn. — Dollar General Corp. reported strong financial results for its 13-week fiscal 2017 third quarter ended November 3.
“We are pleased with our overall third quarter results, which include a strong same-store sales growth of 4.3% and increases in both average transaction amount and customer traffic over the 2016 third quarter. During the quarter, we effectively balanced our same-store sales growth while achieving gross profit rate expansion and continuing our planned investments in the business,” commented Todd Vasos, Dollar General’s chief executive officer.
He said the company remains excited about the future as it goes into next year. “For fiscal 2018, we have plans to execute approximately 2,000 real estate projects comprised of 900 new stores, 1,000 store remodels and 100 store relocations. We continue to believe that investing in the business through our high-return new store growth is the best use of our capital to help drive long-term shareholder value. Our new store growth is complemented with a significant increase in our store remodel program from fiscal 2017 that we view as an investment to enhance and consistently deliver on our brand promise to help our customers save time and money every day,” he added.
Net sales increased 11% to $5.90 billion in the 2017 third quarter compared to $5.32 billion in the 2016 third quarter. Same-store sales increased 4.3%, attributable to increases in average transaction amount and customer traffic, including an estimated 30- to 35-basis-point net benefit from hurricane-related sales. Same-store sales increases were driven by positive results in the consumables, seasonal and apparel categories, partially offset by negative results in the home products category. Same-store sales results in the three non-consumables categories, when aggregated, were positive. The net sales increase was also positively affected by sales from new stores, modestly offset by sales from closed stores.
Gross profit, as a percentage of net sales, was 29.9% in the 2017 third quarter, an increase of eight basis points from the 2016 third quarter. The gross profit rate increase was primarily attributable to higher initial inventory markups and an improved rate of inventory shrink. Partially offsetting these items were a greater proportion of sales of consumables, which generally have a lower gross profit rate than other product categories; sales of lower-margin products comprising a higher proportion of consumables sales; and increased transportation costs.
Net income was $253 million, or 93 cents per diluted share, in the 2017 third quarter, compared to net income of $235 million, or 84 cents per diluted share, in the 2016 third quarter. An estimated 5-cent hurricane-related net negative impact, driven by hurricane-related expenses, is included in diluted earnings per share for the 2017 third quarter.