Discount chain Dollar General to sell beer, wine

— Discount retailer Dollar General Corp. has begun selling beer and wine in some of its stores in the Southeast.

The Goodlettsville, Tenn.-based company has sold food and drinks for years in its 9,000 stores in 35 states — along with everything from home decor items to health and beauty supplies and apparel.

Dollar General spokeswoman Tawn Earnest said the company expects to eventually offer beer or wine in half its stores, but declined to say where the stores already selling alcohol are located.

"The company is exploring opportunities in locations where there is a customer demand," Earnest said in a release on Wednesday.

Consumable sales account for almost 70 percent of Dollar General's total revenue, compared to other discount chains where such sales account for about half of total revenue, according to Zoe Tan, a Morningstar analyst who follows Dollar General and other discount retailers.

This focus on consumables has served the company well, particularly during the economic downturn as consumers on tighter budgets rely on Dollar General for daily necessities, she said.

"This (beer and wine) is generally in line with what they've been doing the past year," Tan said. "They've been adding quite a bit of consumables. I think this is another way to help drive store traffic. This seems like a natural step to providing a different option to consumers in the store."

Tan said Walgreen Co. also has plans to start selling beer and wine again in its stores. She said she's not aware of other dollar stores like Family Dollar or Dollar Tree offering alcohol.

One of the largest discount chains in the U.S., Dollar General employs around 80,000 people. It opened its first store in Springfield, Ky., in 1955.

Dollar General reported that its net income rose nearly 64 percent in its first quarter, from Feb. 1 to April 30, from the prior year. The company earned $136 million, or 39 cents per share for the quarter. Excluding the impact of a stock offering during the quarter, the company earned 42 cents per share. Revenue increased 11.9 percent to $3.11 billion for the quarter.

Dollar General has said it plans to open approximately 600 new stores and to remodel or relocate a total of nearly 500 stores in 2010.

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