Dollar General Corporation DG is committed toward ramping up investments in the wake of rising competition from the likes of Dollar Tree DLTR, Costco COST and Ross Stores ROST. The company’s everyday low-price model is anticipated to continue to drive traffic despite the rising popularity of online retailers. We believe that store expansion initiatives and continued restructuring, as evident from steady store openings and the improvement of distribution centers, respectively, should keep driving higher revenues.
This Tennessee-based company’s commitment to better pricing, private label offerings, effective inventory management, and merchandise and operational initiatives has aided it in carving out a niche in the retail space. This is fairly evident from Dollar General’s impressive comparable-store sales growth.
Fiscal 2018 was the 29th consecutive year of comparable-store sales growth for the company. In first, second, third and fourth quarter of fiscal 2018, comparable-store sales increased 2.1%, 3.7%, 2.8% and 4%, respectively, owing to rise in average transaction amount and customer traffic. Consumables, Seasonal and Home categories favorably impacted the metric, while Apparel category had a negative impact on the same. Management now anticipates fiscal 2019 net sales to increase about 7% with same-store sales growth of approximately 2.5%.
Moreover, in order to increase traffic, Dollar General is focusing on both consumables and non-consumables categories. The company is also offering better-for-you products at affordable prices. Additionally, the company is expanding its cooler facilities to enhance the sale of perishable items and rolling out DG digital coupon program and DG Go app. Management recently highlighted its plan to launch two transformational strategic initiatives — DG Fresh, designed to enable self-distribution of fresh and frozen products and Fast Track, an in-store labor productivity and customer convenience initiative.
The company has adopted a disciplined approach to store openings, expansion and refurbishment. It plans to open about 975 new stores, remodel 1,000 stores and relocate 100 stores. Of the planned remodels, the company plans to convert approximately 500 stores in the Dollar General traditional plus format. It will add fresh produce section to approximately 200 of these stores.
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Ross Stores, Inc. (ROST) : Free Stock Analysis Report
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