--Significant expansion planned --Cap ex budget seen at $600 million to $650 million --Chief executive says customers still stung by economy (Adds comments from conference call and analyst comment. Updates stock price.) By Mia Lamar and Karen Talley Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- Dollar General Corp. (DG) on Thursday reported its fiscal fourth-quarter earnings rose 31% on increased traffic and customer spending. The deep discounter also outlined plans for significant expansion this year. Dollar General will add about 625 stores in 2012 and continue refurbishing existing ones with equipment, like large coolers, so it can add in-demand merchandise like consumables. The company also continues to try out much larger stores, in the 10,000-square-foot range. This year's capital expenditures are forecast to be in the range of $600 million to $650 million. In terms of pricing, Dollar General plans to add more $1 items and increase flows of apparel into stores as a way of increasing its appeal. "While we are seeing some indications of positive trends in the economy, we believe our customer's discretionary spending will continue to be constrained in 2012," Chief Executive Richard Dreiling said on a call with analysts. Higher prices at the pumps serve as something of a boost for Dollar General. "When gas prices get higher, more customers need us," Dreiling said. The retailer of low-cost goods has seen its profits push higher in recent quarters as it has opened new stores and added better-known brands of merchandise to its shelves. "In this economic environment where the lower-end customer continues to struggle and the middle income consumer has been under some pressure there is a search for value," said John Tomlinson, retail analyst at ITG Investment Research. Shares hit a record high of $46.95 during Thursday's session. They were recently up 3.4% to $46.28. For the quarter ended Feb. 3, the company reported a profit of $292.5 million, or 85 cents a share, compared with a year-earlier profit of $222.5 million, or 64 cents a share. Stripping out items like stock-based compensation, per-share earnings rose to 87 cents from 65 cents a year ago. Sales grew 20% to $4.19 billion. They climbed 12% when excluding an extra week in the latest quarter. Same-store sales jumped 6.5% on increases in customer traffic and the average transaction amount. Fourth-quarter sales were primarily driven by consumables, which generally have a lower margin, with snacks, beverages and perishables leading in the way. Analysts polled by Thomson Reuters had most recently forecast earnings of 82 cents a share on revenue of $4.11 billion. Gross margin narrowed to 32.2% from 32.4% as purchase costs rose on inflation. Sales of consumable items -- Dollar General's biggest revenue generator -- jumped 23% to $3 billion. Seasonal products sales were up 12% from a year earlier, while sales of home products and apparel rose 21% and 5.4%, respectively. For the year ahead, the company forecast earnings of $2.65 to $2.75 a share, bracketing the $2.71 a share currently expected by analysts polled by Thomson Reuters. Sales are expected to increase 8% to 9%, or 10% to 11% excluding an extra week last year. Analysts currently expect an 8% sales increase. Same-store sales, based on a 52-week period, are expected to rise 3% to 5% over the prior year. -By Mia Lamar and Karen Talley, Dow Jones Newswires; 212-416-3207; mia.lamar@dowjones.com

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