MW: Dollar General lifts outlook as profit rises 51%
NEW YORK (MarketWatch) -- Discount retailer Dollar General Corp. said Tuesday that its fiscal second-quarter profit jumped 51%, helped by increased traffic and the average amount that consumers spent in its stores, and boosted its forecast for the year.
Still, like other retailers, Dollar General (DG 27.45, +0.07, +0.26%) said it's closely monitoring consumers' response to the economic and competitive climate. The company added that it will continue to lower costs, as shoppers remain pressured by the macroeconomic environment, including "sustained rates of high unemployment."
In the quarter, Dollar General's net income rose to $141.2 million, or 41 cents a share, from $93.6 million, or 29 cents a share, in the year-earlier period. Sales increased 11% to $3.21 billion, said the Goodlettsville, Tenn.-based retailer, which had 9,113 stores at the end of the quarter.
Excluding a loss related to the early repayment of certain long-term obligations, the company said it would have earned 42 cents a share.
Dollar General raised its adjusted profit forecast for the year to a range of $1.68 to $1.74 a share from a previous projection of $1.62 to $1.69 a share. Same-store sales, a key industry performance metric that excludes results from newly opened and closed stores, are forecast to rise 4% to 6%. The company noted that same-store sales picked up pace in the last month of the second quarter, and it's "encouraged" with sales so far in the third quarter.
On average, analysts polled by FactSet Research were looking for the company to earn 39 cents a share in the second quarter and $1.73 a share for the year.
Dollar General shares were unchanged in premarket trading. They've risen 22% this year.
During the second quarter, same-store sales rose 5.1%, boosted by customer traffic and an increase in the average transaction amount.
Sales of consumables rose 12% to $2.3 billion. Seasonal-goods sales climbed 11% to $471.2 million. Home-goods sales rose 4.8% to $222.5 million, while apparel sales gained 4.7% to $222.1 million.
Gross margin widened to 32.2% from 31.2%, after the company cut product costs to help offset increased discounts and higher transportation costs.
Selling, general and administrative expenses fell to 22.9% of sales from 23.2% after the company lowered estimated employee incentive compensation and generated savings through recycling efforts.
