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Dollar General's Massive 1,000-Store Expansion May Not Counteract Slumping Same-Store Sales

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Dollar General

While many retailers are struggling, closing stores and even facing extinction, Dollar General is planning to build 1,000 U.S. stores this year.

Experts wonder whether the discount retailer will keep its ambitious promise, Retail Dive reports. Averaging out to 2.5 new stores a day, Dollar General’s expansion plans are the largest in recent U.S. history and will bring the retailer into North Dakota, increasing the firm’s state count to 44.

But will this boost same-store sales? Cushman & Wakefield VP of retail research in the Americas Garrick Brown told Bisnow the company's footprint expansion is a push by Wall Street to counteract the company's lack of organic same-store sales growth, which is slumping because the market is oversaturated. In its Q3 earnings report last month, the firm reported its second consecutive quarter of disappointing profits and same-store sales that dropped 0.1% compared to the previous year. 

"There's still enough people on Wall Street betting on the low-end market that think there’s still room for growth. I don’t see it," Brown said. "It's a Wall Street play, but if I'm a landlord, I'm a little nervous about signing a deal."

With 13,000 retail locations as of August 2016, Dollar General already has more retail stores in the U.S. than any other company, beating out Walmart and CVS, which have 5,229 and 9,600 locations, respectively. If these plans come to fruition, the discount shop will even challenge McDonald’s number of U.S. locations.