Dollar General cautious, but still planning hundreds of new stores

Despite strong third quarter sales and earnings results, Dollar General CEO Rick Dreiling is cautious about the fourth quarter. He says customer spending has been erratic, which indicates uncertainty about the economy.

"It is my belief that our core customers are concerned about their financial outlook, which is resulting in a dynamic that is driving the current competitive environment to be more promotional," said Dreiling.

For the fourth quarter, Dollar General is forecasting modest comparable sales gains, and flat-to-slightly decreased gross profits.

The company has 10,300 stores and plans to add 635 more during fiscal 2013, including 40 Dollar General Plus stores and 20 fresh-grocery Dollar General Market stores.

Dollar General's 10,000th store to be a grocery market

In a few days Dollar General will open its 10,000th store, and it will be a Dollar General Market, which resembles a "price-impact grocery store," according to company officials. The store will open in California, where the company's Market format is expected to see significant growth.

During a conference call to discuss fourth quarter results, executives said the company ended 2011 with 69 Dollar General Markets. As for the quarter, Dollar General's net income totaled $293 million, up over 31% from the same period one year ago. Sales rose 20% to about $4.2 billion.

Produce Retailer's Pamela Riemenschneider recently visited a Dollar General Market in Florida and came away pleasantly surprised. She said the store was easily double the footprint of a standard Dollar General and featured a bright green, "fresh" design. The produce department featured bagged apples, onions, potatoes, bananas, mangoes, several types of tomatoes and a 10-foot refrigerator packed with six types of bagged lettuce and salad, and many varieties of fruits and vegetables.

Currently there are no Dollar General Markets in PA, NJ or DE.