Dollar General’s aims to add another 1,000 stores in 2017

New Store Openings to Boost Dollar General’s Fiscal 2017 Top Line

1Q17 Results Preview: What’s in Store for Dollar General? PART 3 OF 6

By Sonya Bells  | May 25, 2017 8:27 am EDT

A look at Dollar General’s comps performance

As discussed previously, Dollar General has posted healthy same-store sales, except that they turned negative in 3Q16. The fourth quarter pulled the company back to the positive territory, as sales comps were driven by an increase in average transaction size. Though the comps rose 1% during 4Q, they remained below the 4% average growth the company saw between 2011 and 2015.

New store openings to boost 2017 sales

For fiscal 2017, the management expects a slightly positive increase in sales comps of up to 2%. The company’s performance is expected to be stronger in the second half of the year.

Even though the comps are likely to remain muted over the next year, DG plans to boost sales by opening new stores. The company aims to add another 1,000 stores in 2017.

The management expects to see growth of 4%–6% based on the above expectations. Wall Street’s estimate of 5.4% is in line with the management’s predictions. However, these estimates compare to a five-year average sales growth of 8.2%.

Competitor Dollar Tree (DLTR) is also expected to witness 6% growth or more in its top line during the next fiscal year. The company will report its first quarter results on May 25 and is expecting top-line growth of around 4% during the quarter.

Investors looking for exposure to Dollar General and Dollar Tree can consider investing in the SPDR S&P Retail ETF (XRT), which invests 2% of its total holdings in the two companies.