DG looking at HBA marketshare expansion as significant growth opportunity

GOODLETTSVILLE, Tenn. - Dollar General is looking to drive future growth in part by capturing more health and beauty trips, Todd Vasos, Dollar General CEO and director, told analysts Thursday. "Health and beauty is one of our categories that we're the least penetrated in today," Vasos said. "And with that said, there's really a lot of opportunity. Because of our convenient nature, our consumers are asking us for more and more of our health and beauty offering."

 

Dollar General introduced a new store layout in February, Vasos said, that streamlines the presentation in such a way that it allows for the expansion of merchandising dedicated to health and beauty without sacrificing too much space dedicated to another category. "The layout is designed to expand high-growth traffic-building categories in a more customer-friendly format with faster checkout. While it's still early, the results of this DG16 layout are very encouraging as our sales performance is meeting our expectations," he said. 

 

"The new store design opened up some opportunity for us in that we didn't have to take out a lot of product to be able to put some of that health and beauty initiative in," Vasos explained. In some cases, there is a pullback in soft goods like apparel. "Apparel does get pulled down somewhat in this model," Vasos said. "But we don't see our apparel business slowing down as we go into 2016. Matter of fact, we're pretty bullish on apparel," he said. "Cindy Long and her team have done a real nice job in giving us a very competitive offering there."

 

Dollar General's health and beauty expansion, in some stores, could go upwards of 16 feet, featuring a healthy mix of national brand and store brand. 

 

"I think when you couple all that together, I think this should be a real win for our consumers at Dollar General," Vasos said. 

 

Looking ahead, Dollar General anticipates opening 900 new stores, including about 80 of the smaller format stores, and relocating or remodeling an additional 875 locations in fiscal 2016. "Our real estate program is the foundation of our growth, with a proven high-return, low-risk model. We are disciplined and focused on financial returns. We are very optimistic about our new store outlook for 2016," Vasos said.