Dollar General maintained its momentum in 2010 by achieving record sales, profits and expansion and it’s looking like 2011 will bring more of the same. Last year, Dollar General opened 600 new stores and remodeled or relocated another 504 units to end its fiscal year on Jan. 28 with 9,372 stores. The additional square footage combined with a 4.9% same store sales increase enabled the company to grow total sales by 10.5% to roughly $13 billion.
Those sales were profitable too, with margin rates expanding and expenses declining. Full year earnings nearly doubled to $628 million or $1.82 a share from the prior year’s $339 million or $1.04 a share. The company’s operating margin increased to 9.8% of sales compared to 8.1% the prior year while expenses accounted for 22.3% of sales compared to 23.2% the prior year.
Dollar General chairman and CEO Rick Dreiling noted the company had a great 2010 and that gave it a tremendous foundation for continued growth.
“Our track record of executing our key initiatives over the past three years gives me confidence that the Dollar General team can successfully execute our 2011 goals,” Dreiling said. “We are off to a strong start in 2011. Even in a challenging macroeconomic environment, we expect to deliver strong financial performance in 2011, including top line growth of 11% to 13% and same store sales growth of 3% to 5%.”
Expectations of improved profitability at Dollar General mean the company will keep the pedal to the metal in terms of expansion. As noted in the press release announcing fourth-quarter results, Dollar General already operates more stores in the United States than any other retailer and that is a distinction it won’t relinquish any time soon with more aggressive expansion planned for 2011. By this time next year the company will have roughly 10,000 stores due to the planned addition of 625 new units and 550 remodels.
That means more competition for all types of food, drug and mass competitors as those stores product assortments increasingly overlap with Dollar General and other extreme value operators who have steadily added food, consumables, HBA, apparel and seasonal items to their product mix during the past decade. Brands are being emphasized too. As Dollar General notes in its financial results release, it sells products from America’s most-trusted manufacturers such as Procter & Gamble, Kimberly-Clark, Unilever, Kellogg’s, General Mills, Nabisco, Hanes, PepsiCo and Coca-Cola.