Dollar General corp.
plans to pour an additional $100 million into its stores, primarily in headcount, as it seeks to lure more bargain-hunting shoppers away from competitors.
CEO Jeff Owen said Thursday that the investment in additional hours is based on its continued sales growth and captures market share by raising store standards and the in-store shopping experience.
The Goodlettsville, Tenn.-based company announced the planned investment for the current year as it reported a 5.7% increase in same-store sales, or sales at stores open at least 13 months, in the recently ended quarter. The company warned last month that stormy winter weather weighed on December results.
The discount retailer said it expects sales to continue rising this year despite challenges from increased shoplifting, rising interest rates and increased inventory.
The company said it plans to spend between $1.8 billion and $1.9 billion investing in the company this year, more than the $1.48 billion Wall Street analysts were expecting, according to FactSet.
The stock fell almost 3% on Thursday.
Stubbornly high inflation, rising interest rates and other economic problems are weighing on Americans, who have pulled back from shopping for clothes and electronics, according to store operators such as Macy’s. Inc.
and Best Buy C/o.
Discount retailers and warehouse clubs, which focus on deals and typically cater to lower-income customers, have fared better as more Americans reevaluate their spending.
Dollar tree Inc.
expects same-store sales to grow this year as higher-income Americans turn to the company’s stores, executives said earlier this month. Both BJ’s Wholesale Club Holdings Inc. and Costco Wholesale corp.
grew same-store sales in the most recently ended quarters as Americans preferred to buy in bulk.
For the three months ended Feb. 3, Dollar General posted a profit of $659.1 million, or $2.96 per share, compared with $597.4 million, or $2.57 per share, in the same period a year earlier. Analysts polled by FactSet were expecting earnings of $2.95 per share.
Sales for the quarter rose 17.9% to $10.20 billion, while same-store sales rose 5.7%. Analysts polled by FactSet expected revenue of $10.24 billion and same-store sales of 5.8 percent.
In the current fiscal year, Dollar General expects revenue to grow from 5.5% to 6%, in line with analysts’ expectations.
Merchandise inventories at cost rose 14.3% on a per-store basis from a year ago to $6.8 billion as of February 3.
Email Will Feuer at Will.Feuer@wsj.com
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Appeared in the March 17, 2023, print edition as “Dollar General To Lift Spending On Store Staff.”