Dollar General affirms commitment to Family Dollar acquisition; reports lift in Q2 sales

GOODLETTSVILLE, Tenn.— Dollar General reported it is still committed to its proposed acquisition of Family Dollar as the company reported $4.7 billion in sales for its second quarter ended Aug. 1, representing an increase of 7.5%. Same-store sales were up 2.1%. 
 
"In regards to our proposal to acquire Family Dollar, we remain firmly committed to the acquisition. The financial benefits of our offer to Family Dollar shareholders are indisputable, and the proposed combination would unlock tremendous value for Dollar General shareholders," said Rick Dreiling, Dollar General chairman and CEO. "We continue to believe the potential antitrust issues are manageable and that our transaction as proposed is both superior and achievable."
 

"For the 2014 fiscal year, Dollar General expects total sales to increase 8% to 9% over the 2013 fiscal year, with same-store sales expected to increase 3% to 3.5%.”

Over the second quarter, Dollar General improved both customer traffic and average ticket for the 26th consecutive quarter, Dreiling reported. "As we enter the third quarter, we are seeing our sales momentum pick back up and expect that momentum to build as our initiatives gain traction with our customers. For the second half of the year, we are well positioned to serve our customers and provide them with the everyday low pricing they count on from us. We remain focused on driving our sales and profitability as we continue to forecast fiscal 2014 adjusted diluted EPS of $3.45 to $3.55 for the full year."
 
Consumables sales continued to increase at a higher rate than non-consumables for the quarter, with the most significant growth related to tobacco products, perishables and candy and snacks. 
 
For the 26-week period ended Aug. 1, net sales increased 7.2% over the comparable 2013 period to $9.3 billion. Same-store sales increased 1.8%. Increases in customer traffic and average transaction amount contributed to the increase in same-store sales. The remainder of the sales increase was attributable to new stores, partially offset by sales from closed stores.
 
For the 2014 fiscal year, Dollar General expects total sales to increase 8% to 9% over the 2013 fiscal year, with same-store sales expected to increase 3% to 3.5%. Adjusted diluted EPS for the fiscal year is expected to be approximately $3.45 to $3.55. 
 
Capital expenditures are expected to be in the range of $450 million to $500 million in 2014. The company plans to open approximately 700 new stores in 2014 and to relocate or remodel, using the company's traditional remodel criteria, approximately 500 stores. In addition, Dollar General plans to complete approximately 400 life cycle remodels.
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