(Reuters) - Dollar General Corp reined in its full-year sales forecast on Thursday and said it remained committed to buying Family Dollar Stores Inc, which would solidify its place as the No. 1 U.S. discount retailer.
Dollar General (N:DG) will lose its top position if it fails to upend a merger agreement between Family Dollar and Dollar Tree Inc (O:DLTR).
Dollar stores are facing increasing competition from small-format stores opened by big-box retailers like Wal-Mart Stores Inc (N:WMT) and online retailers such as Amazon.com Inc (O:AMZN).
Dollar General took its $80-per-share bid for Family Dollar (N:FDO) directly to shareholders in September. Family Dollar shareholders are scheduled to vote this month on Dollar Tree's $74.50-per-share offer.
Dollar General said on Thursday it will give an update on its offer ahead of the shareholder vote on Dec. 23.
Dollar General narrowed its sales growth forecast for the year ending in January to about 8 percent, for the year ending January, from a range of 8 percent to 9 percent.
It also said same-store sales will increase at or below the previous forecast of 3 percent to 3.5 percent for the year.
The company reported same-store sales growth of 2.8 percent for the quarter ended Oct. 31. Analysts estimated a rise of 3.2 percent, according to a poll by research firm Consensus Metrix.
Dollar General's net income slipped to $236.3 million in the third quarter from $237 million, but earnings per share rose to 78 cents from 74 cents a year earlier due to fewer outstanding shares.
Gross profit as a percentage of net sales fell 18 basis points to 30.1 percent as lower-margin consumables like tobacco and perishable products continued to make up a larger chunk of sales.
Selling, general and administrative expenses rose to 21.8 percent of net sales from 21.4 percent a year earlier, included expenses from its bid for Family Dollar.
Revenue increased to $4.72 billion from $4.38 billion.
Analysts, on average, expected earnings of 80 cents per share on revenue of $4.78 billion, according to Thomson Reuters I/B/E/S.
For 2015, the discount chain plans to open 730 stores and remodel another 875 units.
Dollar General shares were down nearly 1 percent at $66.10 in early trading. Up to Wednesday's close, the stock has risen over 10 percent this year.
(Reporting by Sruthi Ramakrishnan, Yashaswini Swamynathan in Bengaluru and Nandita Bose in Chicago; Editing by Saumyadeb Chakrabarty and Jeffrey Benkoe)