Dollar General beats sales estimates, to hike store managers pay

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U.S. discount retailer Dollar General Corp (DG. N) reported better-than-expected quarterly sales and said it would raise wages for store managers, replicating similar moves by larger retailers such as Wal-Mart (WMT. N). Dollar General said on Thursday it would hike compensation and provide more training for its store managers, a move that it hopes will improve service quality in stores over time but will pressure earnings this year. Wal-Mart in 2015 had said it would spend $2.7 billion on wages, benefits and training, a move that it said had improved service quality and boosted sales last year. Other retailers have also hiked manager salaries in the past year in response to a tight labor market and also to comply with a rule change that extended mandatory overtime pay to more workers.

Dollar General said it had earmarked about $70 million in 2017, mainly for the pay hikes. The company said sales rose 13.7 percent to $6.01 billion in the fourth quarter ended Feb. 3, helped by higher average spending at its stores, even as store traffic declined slightly.

Analysts had expected sales of $5.97 billion, according to Thomson Reuters I/B/E/S. Dollar General and larger rival Dollar Tree Inc (DLTR. O) face stiff competition from Wal-Mart and Target Corp (TGT. N), which have been discounting aggressively, even amid falling grocery prices, to boost store traffic.

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