Dollar General to Open More Stores, Self-Distribute Fresh Food

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GOODLETTSVILLE, Tenn. — Following a "great" 2018, Dollar General entered 2019 with a strong foundation for success, according to CEO Todd Vasos.

As part of the discount retailer's plans for fiscal 2019, Dollar General is setting its sights on opening 975 new stores, remodeling 1,000 mature store remodels, and relocating 100 stores, reported Convenience Store News sister publication Progressive Grocer.

During fiscal year 2018, Dollar General opened 900 new stores, remodeled 1,050 stores and relocated 115 stores.

The progression plan comes roughly at the same time that rival operator Dollar Tree Inc. revealed plans to close as many as 390 of its Family Dollar stores that are underperforming, and converting approximately 300 locations during its fiscal year 2019.

Dollar General — whose fiscal year 2018 net sales rose 9.2 percent to $25.6 billion vs. $23.5 billion in fiscal year 2017 — said the increase included positive sales contributions from new stores and growth in same-store sales, modestly offset by the effect of store closures. Same-store sales increased 3.2 percent from last year, which the retailer attributed to a rise in average transaction amount.

The fiscal year 2018 same-store sales increase also included growth in the consumables, seasonal and home categories, partly offset by declines in apparel. Customer traffic was flat, PG reported.

"During the fourth quarter we delivered strong same-store sales growth, driven by performance in both consumable and non-consumable product sales, which resulted in our highest two-year same-store sales stack in 21 quarters," Vasos commented during Dollar General's recent earnings call. "We also continued to make progress executing our digital and non-consumables strategic initiatives, while staying true to our ongoing operating priorities."

Looking to 2019, Dollar General will also introduce two new transformational strategic initiatives: DG Fresh and Fast Track.

Designed to enable self-distribution of fresh and frozen products, DG Fresh is currently in operation at approximately 300 stores. Fast Track, which Dollar General believes will enhance in-store labor productivity and customer convenience, will launch in the near future, reported Market Watch.

Spending on the two programs is expected to be $50 million in 2019.

Vasos outlined three goals for DG Fresh on the earnings call:

  1. Reduce product calls, which will give margins a boost;
  2. Drive up in-stock levels sales; and
  3. Increase value for customers.

"Today there are many items we cannot cost-effectively procure through our current mode, and in addition, self-distribution will allow us to offer a wider selection of our own private brands to provide our customers with even more compelling value," the CEO explained. "Overall, we expect DG Fresh to allow us to do a better job of tailoring our product selection to fit the needs of our customers, particularly in rural areas.

"Our team is very excited about the future, and I believe we remain well positioned to continue delivering best-in-class value and convenience to our customers and creating long-term shareholder value," Vasos added.

Goodlettsville-based Dollar General operates 15,370 stores in 44 states.

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