Thursday, March 26, 2009

Dollar General to add 450 Stores

Thrifty shoppers drive discounter's growthBy Randy McClain • THE TENNESSEAN • March 25, 2009 Buoyed by a solid sales performance in a down year for many other retailers, Dollar General plans to add as many as 450 new stores in the year ahead and renovate others to build on its $10.5 billion in annual sales. "I think we're seeing a new era of consumerism in which it's going to be fashionable to be conservative and save money," said Rick Dreiling, the discount chain's chief executive officer and chairman. Dreiling made the comments after Dollar General reported annual and fourth-quarter gains in same-store and total sales as well as profits. "We were able to achieve these improvements despite the increasingly difficult economic conditions," Dreiling said. Annual profits rose to $108.2 million for the year ended on Jan. 30, compared with a loss of $4.8 million a year earlier. Goodlettsville-based Dollar General, which sells most of its merchandise for $10 or less, also said net income for the 13 weeks that ended Jan. 30 rose to $81.9 million from $55.4 million a year ago. Quarterly sales rose 11.2 percent to $2.85 billion. Sales at stores open at least a year, or same-store sales, rose 15.1 percent in February, helped in large part by budget-conscious shoppers making more frequent visits to the discount chain's outlets. "The economy is giving us a lot of trial with a lot of people who haven't experienced Dollar General in a year or two, or maybe never, and they're coming in and seeing the improvements that we're making," Dreiling said on a conference call. "Even though the economy is going to turn around eventually, I think it's safe to say that there's going to be a new consumerism, and that saving money is going to be fashionable for a very long period of time." Dollar General operates more than 8,400 stores in 35 states and sells discounted merchandise ranging from food to shampoo to clothing. In 2007, as the retailer was trying to restructure, it was sold to private equity group Kohlberg Kravis Roberts & Co. in a nearly $7 billion deal. This fiscal year, the company expects to remodel or relocate 400 stores, in addition to the 450 new stores it plans to open. Last year, Dollar General opened 207 stores, Dreiling said. Profits look sweeter "What's going on with our sales is a combination of a couple of things. Based on anecdotal evidence from store managers, they're seeing faces they haven't seen before, and they're seeing regular customers more often," Dreiling said. "More people are coming." Dreiling said the chain has made its store designs and merchandising efforts more efficient and boosted profits by selling more private label products, including food. The consumable side of the business is "performing exceptionally well," he said. "That means food and anything else that is consumed like paper towels, pet food or candy." One factor driving sales is that some middle- to upper-income shoppers are attracted to Dollar General, analysts say. The CEO said Dollar General plans to expand private label goods in the year ahead to include more non-edibles, including clothing and some seasonal merchandise. For the year as a whole, total sales increased 10.1 percent, and same-store sales rose 9 percent, the company said.

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