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Retail

Higher Store Investments To Hit Dollar General Profits In 2019

Dollar General Corp plans to plough back part of its 2019 profit to revamp its supply chain and add self-checkout lanes at its stores as it competes with online grocers and U.S. chains Walmart Inc and Kroger Co .

The retailer said it would spend $50 million on the initiatives.

The company, which operates more than 15,000 stores in the United States, said it would open 975 new stores and remodel 1,000 old ones.

The upgrades would include introducing self-checkout lanes and tweaking its shelf stocking process to make it faster. Dollar General also said by the end of fiscal 2019 it aims to become its own distributor of fresh and frozen foods to as many as 5,000 stores in a bid to rein in costs and offer more private label brands.

Simplify The Network

"We have some distribution voids quite frankly, across the country.... By taking it in-house, we believe it will simplify our network and be able to execute that much better," Chief Executive Officer Todd Vasos said in an earnings call.

While these steps would pressure earnings this year, Dollar General said it would lead to cost savings as early as 2020.

To pull in more customers, Dollar General will start its own click-and-collect service later this year and also launch its private label baby product and cosmetics brands.

Net sales in the fourth quarter rose 8.5% to $6.65 billion, beating analysts' expectations of $6.61 billion.

Rival Dollar Tree Inc's shares were down 1.31%. The company last week reported better-than-expected same-store sales, but wrote down the value of its Family Dollar chain by $2.7 billion after years of stagnating sales.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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