Dollar General Announces Profit That Beats Expectations

On Thursday, Dollar General said its profit had ended higher than expectations of Wall Street as traffic in its stores improved, though the company lowered its sales guidance for 2019.

For its fiscal year that ends in January, the discount retailer said it was expecting growth of comparable sales to be between 2.5% and 2.8%, which is down from prior guidance for growth of between 3% and 3.5%.

Dollar General cited that its core customers tend to shop near events.

The company said adjusted earnings would be between $3.88 and $3.93 per share compared to its prior earnings forecast of between $3.85 and $3.95 per share.

Dollar General expects a benefit from taxes of 5 cents per share during its current quarter.

Looking forward, Dollar General announced that in 2020 it would adopt the zero-based budgeting strategy, which is an austerity measure requiring managers to justify their spending plans from scratch for each year.

Dollar General continues to pick up new customers six years following the recession as they are drawn to low prices for items that are smaller in size and sold closer to where they live.

Dollar General is adding more items that it is selling for between $1 and $5. It has seen its growth in areas like snacks and candy, tobacco related products and seasonal items.

In its most recent quarter, Dollar General said sales in existing locations were up 2.3%, while Wall Street was expecting sales at same stores to expand by 2.6%. The metric was helped by the higher traffic and the value of the average transaction.

The company said the its quarter that ended October 30, excluding Halloween, while the prior quarter had included Halloween.

Overall $253.3 million in profit was posted by Dollar General equal to 86 cents per share, which was up from last year’s $236.3 million equal to 78 cents per share.

Excluding certain items, earnings per share were 88 cents per share, while sales increased by 7.3% ending the quarter at $5.07 billion.

Analysts were expecting $5.09 billion in revenue and earnings per share of 87 cents.

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