What drove Dollar General’s fiscal 2017 sales?
Dollar General’s (DG) sales grew at a CAGR (compound annual growth rate) of ~8% between fiscal 2011 and 2016. In fiscal 2017, its total sales increased 6.8% YoY (year-over-year) to $23.5 billion. Growth was driven by a 2.7% jump in same-store sales and a 9% increase in square footage.
The company said that the additional 53rd week in fiscal 2016 negatively impacted the fiscal 2017 growth rate by almost two percentage points.
Comps and square footage growth
The company said it opened a record 1,315 new stores during the year. In comparison, competitor Dollar Tree (DLTR) opened ~600 stores in its fiscal 2017, which ended on February 3, 2018. The latter discount retailer recorded sales comps of 1.9% during the year.
Consumables and seasonal categories were the key drivers for Dollar General’s Q4 comps. Poor performance for the home and apparel categories, however, partially offset this growth.
“For the year, we opened a record 1,315 new stores and delivered a same-store sales increase of 2.7%, marking our 28th consecutive year of positive same-store sales growth. At the same time, we proactively made significant investments in the business that we expect will contribute to sustainable sales and profit growth in the years ahead,” commented Todd Vasos, Dollar General’s CEO.
Investors looking for exposure to Dollar General through ETFs can consider the Guggenheim S&P 500 Equal Weight Consumer Discretionary ETF (RCD), which invests 1.2% of its total holdings in the company.
See the next part of this series for the fiscal 2017 margins and profitability.