Dollar General noted in an earnings call on Thursday that the retail environment was tightening, and offered a conservative to weak earnings outlook for the upcoming fiscal year. The retailer is going to face increased competition in the dollar-store sector when two major rivals combine in the next few months.

The firm also announced it has added $1 billion to its share buyback program, and will begin paying out a quarterly dividend, starting with  22 cents a share as of next month.

Dollar General

Dollar General provided guidance for per-share earnings of $3.85 to $3.95 and 8% to 9% sales growth for the upcoming fiscal year. Consensus analyst forecast was $3.99 a share in earnings and 9% revenue growth, according to Thomson Reuters.

The CFO of Dollar General, David Tehle, is also set to retire in July. The company noted it is undertaking a search for his successor and is considering both internal and external candidates.

Details on Dollar General quarterly earnings report

In the firm’s most recent quarter, Dollar General’s sales at existing locations were up by 4.9%. This continues a trend as Dollar General has posted sales growth for several months now as it has given more discounts and broadened product offerings.

Of note, gross margins slipped to 31.7% from 31.9% last year given greater sales of lower-margin items including tobacco products and food.

Dollar General reported a profit of $355.4 million, or $1.17 a share, for the quarter. That was a nice move up from $322.2 million, or $1.01 a share, the prior year. Gross sales increased a solid 9.9% to $4.94 billion.

Consensus analysts earnings estimates were for EPS of $1.17 a share and revenue of $4.95 billion.

New competitive landscape

Dollar General, currently the biggest dollar chain in the U.S., will soon lose its top dog status. It will face a new competitor with 13,000 stores and $19 billion in revenue after Dollar Tree and Family Dollar Stores complete their merger.

Of note, Dollar General (11,789 stores and $18.9 billion in revenue in 2014) tried to snap up Family Dollar last year, offering $9 billion in cash, but the proposed merger was shot down over antitrust issues.

The new, expanded Dollar Tree will have an extremely diverse base of stores and significantr potential to reduce costs because of its scale, notes Moody’s Investors Service analyst Mickey Chadha.