Dollar General's sales beat; to raise store managers' pay

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[March 16, 2017]  (Reuters) - U.S. discount retailer Dollar General Corp reported a better-than-expected 13.7 percent increase in quarterly sales on Thursday, helped by higher spending at its stores driven by strong demand for home products.

A sign is seen inside a Dollar General store in Chicago, Illinois, U.S. May 23, 2016. REUTERS/Jim Young

 

The company's shares jumped 4.4 percent to $76.00 before the bell.

The retailer also said it would make significant investments in compensation and training for its store managers, which is expected to pressure earnings in 2017.

Dollar General said it had earmarked about $70 million for managers' pay for the year.

The move follows similar investments from larger retailers such as Wal-Mart Stores Inc <WMT.N> and Target Corp <TGT.N>, which last year hiked wages to improve employee retention as well as service quality in stores.

Dollar General and larger rival Dollar Tree Inc <DLTR.O> are facing stiff competition from Wal-Mart and Target, which have been discounting aggressively to attract more shoppers.

Dollar General said store traffic had declined slightly in the fourth quarter ended Feb. 3.

Net income rose to $414.2 million or $1.49 per share in the quarter, from $376.2 million or $1.30 per share a year earlier.

Net sales rose to $6.01 billion from $5.29 billion.

Analysts on average had expected earnings of $1.41 per share and revenue of $5.97 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Sai Sachin Ravikumar)

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