Dollar General Corp. said Thursday it plans to increase square-footage growth 7% next year after boosting growth 6% this year.
Todd J. Vasos, CEO of the Goodlettsville, Tenn.-based chain, said the company anticipates opening 900 new stores in 2016, compared with 730 this year — in a combination of urban, suburban and rural locations.
John W. Garratt
John W. Garratt
Anita C. Elliott
Anita C. Elliott
The company said it expects to begin shipments in February from a new distribution facility in San Antonio, Texas; and it has already begun construction on a new facility — its 14th — in Janesville, Wis.
Dollar General also said Thursday John W. Garratt has been named EVP and CFO, succeeding David Tehle, who retired in June, when Garratt was named interim CFO after serving as SVP of finance and strategy.
Garatt joined Dollar General in October 2014 after serving as VP, finance, and division controller for KFC, a subsidiary of Yum! Brands.
In another change Anita C. Elliott, SVP and controller, has been named chief accounting officer. Prior to joining Dollar General in August 2005, Elliott was VP and controller for Big Lots after serving as VP and controller for Jitney-Jungle Stores.
Dollar General disclosed financial results Thursday for the third quarter and 39 weeks ended Oct. 30.
Net income for the 13-week quarter rose 7.2% to $253 million, while sales increased 7.3% to $5.1 billion and same-store sales were up 2.3%. The company said the shift of Halloween to this year’s fourth quarter, compared to last year’s third quarter, resulted in a negative impact on same-store sales of between 20 basis points to 30 basis points.
Sales of consumables increased at a higher rate than sales of non-consumables, the company said, with significant growth driven by candy and snacks, tobacco products and perishables.
For the 39-week period net income climbed 11.1% to $789 million, while sales increased 8% to $15.1 billion and same-store sales rose 2.9%.
Daniel Binder, an analyst with Jefferies, New York, said Dollar General results were better than expected, given clearance activity at competitor Family Dollar, the shift in Halloween and mixed confidence levels among lower-income consumers.
Talking with investors, Vasos said the company plans to begin rolling out a new prototype early in 2016 that features a more customer-friendly layout, faster checkouts and optimized assortments.
He said the company has already tested many components of the new prototype and has four new-prototype stores up and running in different states to test the complete concept, “and right now, though it’s still in the early stages, we’re very, very encouraged in what we see based on how the consumer is shopping the new format versus the old format.

“We spent a lot of time on the front side with our consumers, seeing what she wanted in the new store,” Vasos pointed out.
The prototype will offer a more convenient and open front-end, he said, “so customers will be able to get in and out quicker and have more products to buy at the front end.”
The prototype also expands the company’s coolers from 16 doors up to 22 doors, with the extra doors housing “anything from immediate-consumption beverages to additional frozen, dairy and perishable-type products,” Vasos noted. “And we’ve done a lot of work in health and beauty and our $1 offerings in seasonal areas throughout the store.”
Other Vasos remarks during the conference call included the following:
  • Dollar General is scheduled to roll out the final phase of its labor investment program during the fourth quarter, following rollouts of the first and second phases in the second and third quarters. He said the company is gaining traction in same-store sales growth in stores on the program since the second quarter, with “significant improvement” in sales, transactions, average basket and customer satisfaction scores.
  • The company is using third-party audits to validate improvements in stocking and inventory management for better on-shelf availability; and efforts to cut shrink are succeeding, with shrink declining across nearly 70% of product departments during the quarter. “We’re rolling out more and more defensive merchandising tools so we can keep products on the shelf for the consumer” Vasos said.
  • Dollar General is seeking to differentiate its brand and using customer segmentation to develop strategies to drive product mix and assortment, marketing and real estate, he noted.