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How Has Dollar General’s Top Line Performed?

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May. 25 2017, Updated 10:05 a.m. ET

Dollar General’s sales to expand 6% in 1Q17

As discussed, Dollar General (DG) will be reporting 1Q17 results on May 31, 2017. Analysts expect to see a year-over-year (or YoY) jump of 6.1% in its top line in 1Q17 to $6.6 billion.

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Dollar General’s 2016 performance

In 2016, Dollar General’s top line rose 8% YoY to $22 billion. The company failed to meet Wall Street expectations in three of the four quarters.

Same-store sales expanded 0.9% during the year, primarily driven by an increase in the average transaction size as traffic trends essentially remained unchanged. There was a strong demand for the company’s home products and consumables. The growth in these categories was partially offset by weak results in the apparel and seasonal categories.

As can be seen in the graph above, the retailer’s sales comps turned negative in 3Q16 after 36 consecutive positive quarters. The management cited ongoing food deflation and a reduction in SNAP benefit levels as the key reasons for this decline.

Comps, however, moved back to the green in 4Q, growing 1% during the quarter. We’ll discuss how the comps are expected to behave in the next part of this series.

Investors looking for exposure to Dollar General through ETFs can consider the ProShares DJ Brookfield Global Infrastructure ETF (TOLZ), which invests 3.7% of its total holdings in the company.

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