Dollar General plans record store openings for 2016
GOODLETTSVILLE, Tenn. — Dollar General reported record sales and profits last year and plans to extend the streak in 2016 with 900 stores and an even greater number in subsequent years, according to the company’s new financial targets.
In 2015, Dollar General opened 730 new stores and remodeled or relocated 881 stores which combined with a 2.8% same store sales increase allowed it to grow total sales 7.7% to $20.4 billion. The company ended its fiscal year on Jan. 29, with 12,483 stores.
Opening 900 stores a year is a daunting challenge, but Dollar General will likely exceed that figure in 2017 and beyond based on new long-term financial guidelines the company shared with investors. Plans call for annual sales growth in the range of 7% to 10% driven by the combination of square footage growth between 6% and 8% and same-store sales growth of 2% to 4%. The topline growth will translate to earnings per share growth of 10% to 15 and once dividends are included the total return to shareholders will range from 11% to 17%, according to the company.
The new targets were spelled out with the release of fourth quarter results which capped off what Dollar General CEO Todd Vasos said was another great year for the company.
“For the 26th consecutive year, we delivered positive same-store sales growth. In the fourth quarter, we effectively balanced sales and operating profit through our toughest quarterly comparison of the year to deliver record results leading to full year diluted (earnings per share) growth of 13%,” Vasos said. “Looking ahead, Dollar General continues to have significant opportunities for growth. Considering the financial results we have delivered over the last three years and consistent with how we are managing the business, our growth model is focused on increasing long-term shareholder value by driving profitable sales growth, capturing growth opportunities, enhancing our position as a low-cost operator and investing in our people.”
Sales in the fourth quarter increased 7% to $5.3 billion and same-store sales increased 2.2% due to growth in customer traffic and transaction size. Net income for the period was $376 million, or $1.30 a share, compared to net income of $355 million, or $1.17, in the 2014 fourth quarter.
Departments with the most significant sales increases were said to be candy and snacks, perishables, tobacco, and food. Growth in the non-consumable category was broad-based with notable strength across seasonal and home, offset by a modest decline in apparel, according to the company.
Dollar General’s annual sales increased 7.7% to $20.4 billion and full year profits increased 9% to $1.17 billion, or $3.95 a share.
As was the case in the fourth quarter, departments with the most significant increases in net sales were candy and snacks, perishables, tobacco, and food. The full year comp increase of 2.8% was driven by increased customer traffic and larger transaction sizes. The company said it realized those benefits because of a refinement in merchandise offerings and increased usage of total square footage.