Dollar General Corp.
plans to put another $100 million into its stores, mostly in staffing, as it appears to attract more bargain hunters from rivals.
Chief Executive Jeff Owen said Thursday that the investment in additional labor appears to build on continued sales growth and capture market share by elevating store standards and the in-store shopping experience.
It in Goodlettsville, Tenn. incumbent company disclosed its planned investment for the current year as it reported a 5.7% increase in same-store sales, or sales in stores open at least 13 months, for the recently closed quarter. The company warned last month that stormy winter weather weighed on December results.
The discounter said it expects sales to continue to rise this year despite challenges posed by higher levels of in-store theft, rising interest rates and rising inventories.
The company said it plans to spend between $1.8 billion and $1.9 billion on investment in the company this year, more than the $1.48 billion Wall Street analysts had expected, according to FactSet.
Shares fell nearly 3% in Thursday trading.
Stubbornly high inflation, rising interest rates and other economic problems are weighing on Americans, who have pulled back on purchases of clothing and electronics, according to store operators such as Macy’s Inc.
and Best Buy Co.
Discount stores and department store clubs that focus on offering deals and typically cater to lower-income customers have fared better as more Americans rethink their spending.
Money tree Inc.
expect same-store sales to increase this year as higher-income Americans turn to the company’s stores, executives said earlier this month. Both BJ’s Wholesale Club Holdings Inc. as Costco Wholesale Corp.
recorded higher same-store sales for their most recently closed quarters as Americans attempted to buy in bulk.
For the three months ended Feb. 3, Dollar General posted earnings of $659.1 million, or $2.96 per share, compared to $597.4 million, or $2.57 per share, in the year-earlier period . Analysts polled by FactSet had expected earnings of $2.95 per share.
Sales for the quarter increased 17.9% to $10.20 billion, while same-store sales increased 5.7%. Analysts polled by FactSet had expected sales of $10.24 billion and same-store sales of 5.8%.
For the current fiscal year, Dollar General expects revenue to grow 5.5% to 6%, in line with analyst expectations.
Trade inventories, measured at cost, rose 14.3% per store from a year earlier to $6.8 billion on Feb. 3.
Write to Will Feuer at Will.Feuer@wsj.com
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Appeared in the March 17, 2023 print edition as “Dollar General To Lifting Spending On Store Staff.”