uploads/2019/03/DG-Sales-Q4-1.png

Analyzing Dollar General’s Sales Growth Drivers

By

Updated

Sales growth in fourth quarter

Dollar General’s (DG) sales grew 8.5% to $6.65 billion in the fourth quarter of fiscal 2018, which ended on February 1, 2019. Analysts expected sales of $6.61 billion. Dollar General’s top-line growth was driven by the strong performance of new as well as mature stores. Dollar General’s SSSG (or same-store sales growth) of 4% in the fiscal fourth quarter was a result of higher transaction size and customer traffic. The company believes that its same-store sales in the quarter benefited from earlier-than-expected SNAP payments during the government shutdown.

Article continues below advertisement

Fiscal 2018 performance

Dollar General’s sales rose 9.2% to $25.6 billion in fiscal 2018. The company’s SSSG was 3.2% in fiscal 2018, marking the 29th straight year of higher same-store sales. Dollar General posted strong sales in the consumables, seasonal, and home categories. However, apparel sales were disappointing in the fourth quarter as well as in the full year. Rival Dollar Tree (DLTR) underperformed Dollar General in fiscal 2018 and reported sales growth of 2.6% to $22.8 billion and SSSG of 1.7%.

Outlook

For fiscal 2019, which ends on January 31, 2020, Dollar General expects net sales growth of about 7.0% and SSSG of about 2.5%. Dollar General is already performing well in the consumables space and is now focusing on improving its non-consumables category sales. Under its non-consumable initiative, the company has been testing new assortment in key non-consumable merchandise categories like home, domestics, houseware, party, and occasion. The company added its expanded non-consumable offering to 700 stores in fiscal 2018 and plans to expand it to about 2,400 stores in fiscal 2019.

Advertisement

More From Market Realist