Retail

Light Revenues Mute Dollar General Earnings Report

DG_Plus
Source: courtesy of Dollar General
Dollar General Corp. (NYSE: DG) reported second-quarter 2015 results before markets opened Thursday. The discount retailer reported quarterly diluted earnings per share (EPS) of $0.95 on revenues of $5.1 billion. In the same period a year ago, Dollar General reported EPS of $0.83 on revenue of $4.72 billion. Second-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.94 and $5.15 billion in revenue.

The company said that same-store sales rose 2.8% in the quarter, driven by increases in both customer traffic and average transaction value. Growth in sales of consumables was driven by candy and snacks, tobacco products and perishables. Within non-consumables, the most significant growth was due to seasonal items, sundries, hardware and housewares.

In its outlook statement, Dollar General reaffirmed financial guidance provided on June 2, 2015. Total sales are expected to increase 8% to 9% over the 2014 fiscal year, with same-store sales expected to increase 3% to 3.5%. Operating profit for 2015 is expected to increase 7% to 9% over the 2014 adjusted operating profit. Diluted EPS for the fiscal year is expected to be approximately $3.85 to $3.95.

Consensus estimates for the full fiscal year call for EPS of $3.95 on revenues of $20.5 billion. Total sales in 2014 came to $18.91 billion, so Dollar General’s forecast range for this year is about $20.42 billion to $20.61 billion.

The company’s CEO, Todd Vasos, said:

Looking ahead to 2016, our team is energized to accelerate our pace of growth as we focus on providing our consumers with everyday low prices and convenient locations. We remain confident in the long-term growth prospects for Dollar General to deliver strong financial results and healthy cash returns for our shareholders.

Three analysts that have weighed in on Dollar General since early June have either reiterated or initiated coverage with the equivalent of a Buy rating. The consensus price target on the stock is $83.59. But a one penny beat on earnings and a miss on revenues will not send investors flocking to the stock Thursday.

Shares traded down about 3.5% in the premarket session Thursday, at $74.01 in a 52-week range of $57.09 to $81.42.

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