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Despite the prevailing retail apocalypse, Dollar General opened 470 retail stores during the third quarter of 2017 with year-to-date store opening stands at 1,044. In its recently concluded quarter, $DG said it would open approx. 1,285 new stores for FY17.
Dollar General posted solid results for 3Q17 as it is spotting increased customer traffic compared to 3Q16. US retail industry, including $DG, is keenly watching the proposed GOP tax bill as the industry hopes for the corporate tax to reduce from 35% to 20%. Retailers expect this tax savings would create new jobs, increase capital investments, etc.
$DG now expects FY17 GAAP EPS of $4.35-4.50, vs prior guidance of $4.25-4.50. Although it continues to forecast FY17 same-store sales growth of slightly positive to an increase of 2%, $DG currently expects that results will be towards the upper end of the range. $DG expects net sales for this period to increase 5-7%.
$DG's same-store sales rose 2.6% in 2Q17, due to increases in average transaction amount and customer traffic. Same-store sales were driven by positive results in the consumables and seasonal categories, partially offset by negative results in the home products and apparel categories.
$DG appointed Carman Wenkoff as EVP and chief information officer (CIO) effective July 10, 2017. Wenkoff replaces current CIO Ryan Boone, who recently announced his retirement. Wenkoff most recently served as CIO and chief digital officer for Subway restaurants.
$DG has opened its 14th distribution center in Janesville, Wisconsin, investing $100MM and creating more than 500 local jobs. Shipping from the 1MM-sq-ft distribution center began in January 2017. It serves approx. 800 stores in nine states in the upper Midwest. Dollar General now has more than 1,300 employees in the state of Wisconsin.
$DG is positive on the fundamentals of the business and the long-term growth potential. The goal is to achieve 10% growth over the long term. The company sees a vast amount of organic growth opportunity. The store level economics are good with a 20% return on new store openings. $DG is also in a good position from a pricing standpoint.
During 1Q17, $DG’s same-store sales growth was driven by consumables and apparel, offset by declines in seasonal and home categories. Operating profit was $474MM. The company entered into an agreement to purchase 322 store sites located across 36 states from a small-box, multi-price point retailer. The deal is expected to close in June.
FY17 GAAP diluted EPS for $DG is forecasted to remain consistent with the prior guidance range of $4.25-4.50. Dollar General sees a 5-7% rise in net sales for the year, with capex of $715-765MM. The chain plans to open about 1,290 new stores in addition to remodeling or relocating 760 stores in the year.