Dollar General, which looks unwilling to relinquish its Family
Dollar's bid, posted third-quarter fiscal 2014 results, wherein
both the top and bottom lines witnessed year-over-year increase of
7.8% and 9.7%, respectively, on the back of growth across
Consumables, Home products and Apparel categories. However, both
the net sales and earnings per share fell short of the Zacks
Consensus Estimate hurt by a competitive retail landscape and lower
margins. We believe Dollar General's initiatives as regards to
management of expense, inventory, merchandise and operations are
likely to push sales north. However, margins are likely to remain
under pressure due to an increase in the sales of lower margin
carrying consumables items and soft sales of discretionary
products. Currently, we stay Neutral on the stock.
Founded in 1939 and headquartered in Goodlettsville, Tennessee,
Dollar General Corporation is one of the largest discount retailers
in the United States. The company trades in low priced merchandise
typically $10 or less. Apart from offering quality private brands,
the company also provides products from other reputed manufacturers
such as Clorox, Energizer, Procter & Gamble, Hanes, Coca-Cola,
Mars, Unilever, Nestle, Kimberly-Clark, Kellogg's, General Mills,
and PepsiCo. As of October 31, 2014, Dollar General had 11,715
stores in 40 states. It offers general merchandise in four
categories namely Consumables, Seasonal, Home products and
The Consumables Category is the leading category (75% of net
sales for fiscal 2013) consisting of cleaning products, health
& beauty products, snacks, perishables, packaged food and pet
supplies and food.
The Seasonal Products Category (13% of net sales for fiscal
2013) consists of prepaid phones and accessories, small
electronics, batteries, toys, greeting cards, hardware,
decorations, automotive gardening supplies, stationery and home
The Home products Category (6% of net sales for fiscal 2013)
includes kitchen supplies, candles small appliances, light bulbs,
cookware, frames, craft supplies, bed & bath soft goods and
The Apparel Category (6% of net sales for fiscal 2013) consists
of casual daily wear for infants, children, girls, boys, women and
men, along with socks, intimate wear, disposable diapers,
accessories and shoes.
Dollar General Corporation (DG): Read the Full
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