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Dollar General forecasts full-year profit below estimates

Dollar General Stores forecast full-year earnings below analysts' expectations, as the company plans to open more stores ahead of a merger of its rivals Family Dollar Stores and Dollar Tree.

Dollar General forecast earnings of about $3.85-$3.95 per share for the year ending January 2016, below the average analyst expectation of $3.99.

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The company said it expects to spend $500 million to $550 million in 2015, partly to open about 730 stores.

A customer walks into a Dollar General store near Montpelier, Vermont.
Adam Jeffery | CNBC

Dollar General stands to lose its position as the top discount retailer in the United States after failing to upend a merger agreement between Family Dollar Stores and Dollar Tree.

Dollar General said full-year total sales are expected to grow 8-9 percent, translating to sales of $20.42 billion to $20.61 billion.

Analysts on average were expecting revenue of $20.54 billion, according to Thomson Reuters I/B/E/S.

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Same-store sales are expected to grow 3-3.5 percent, the company said.

Dollar General also authorized a $1 billion share repurchase plan, and said Chief Financial Officer David Tehle will retire on July 1.

Net income rose to $355.4 million, or $1.17 per share, in the fourth quarter ended Jan. 30, from $322.2 million, or $1.01 per share, a year earlier.

Net sales increased 9.9 percent to $4.94 billion.

Analysts had expected earnings of $1.17 per share and revenue of $4.95 billion.

Same-store sales rose 4.9 percent, in line with average expectation of analysts polled by research firm Consensus Metrix.