RetailAnalysis
20 March 2017
Dollar General to increase fresh offer

After reporting strong growth for FY 2016, Dollar General has announced it will increase its fresh produce offer.

Q4 performance ahead of expectations

Sales for the quarter were up 13.7% (includes an extra week compared to 2015), to $6.01bn, with same store sales up 1%. Net profit grew by 10% to $414.2m. Following heavy expansion throughout the year, full year sales were up 7.9% to $22.0bn (includes an extra week compared to 2015), with same store sales up 0.9%. Net profit for the year was up 6.8% to $1.25bn. Sales were driven by positive results in the grocery and home categories, and partially offset by negative results in seasonal and clothing. Following this, the retailer will significantly expand its fresh produce offer, adding more chilled space and expanding this to some of its smaller stores in a bid to increase footfall and frequency. This reflects the success it has had in converting the Walmart Express stores it acquired to Dollar General stores.

Continuing to expand the store estate

Dollar General continues to expand at pace, opening 900 new stores in 2016 and bringing the total number of stores to 13,320 at the end of FY 2016. The retailer plans to step this up further in 2017, with ambitions to open another 1,000 stores throughout the year. There is also an increased focus on smaller stores, with 160 additional small stores planned for 2017, building on the 90 that have already been opened. These stores are around 6,000sqft and are located in central metropolitan and rural areas. It's also testing DGX, an even smaller convenience store concept which opened its first location earlier this year.

Prices to remain stable

Having recently invested in hundreds of price cuts across 17% of its stores, CEO Todd Vasos has said that prices will now remain stable, with no immediate plans to lower them further as they are already priced very aggressively.

To improve performance at existing stores, it is raising pay for managers and investing more into training. Trials of this have led to increased sales and lower staff turnover. The retailer also announced that James W. Thorpe, Executive VP and Chief Merchandising officer will be retiring on April 15th, 2017 and the search has begun for his successor. 

 

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