Dollar General Falls Short on Revenues

For the full year, Dollar General posted adjusted EPS of $3.20 on revenues of $17.5 billion, compared with EPS of $2.91 on revenues of $16 billion in 2012. The consensus estimates called for EPS of $3.21 on revenues of $17.63 billion.

The company said that same-store sales rose 1.3% in the fourth quarter, driven by increased sales of tobacco and perishables. For the full year, same-store sales rose 3.3%, again with tobacco sales and perishables contributing the majority of the increase throughout the year.

In its outlook statement, Dollar General said it expects full-year 2014 sales to rise 8% to 9% above the 2013 total, and same-store sales are forecast to rise 3% to 4%. Diluted EPS is forecast at $3.45 to $3.55 and assumes share repurchases totaling $1.1 billion

For the first quarter ending on May 2, Dollar General expects same-store sales growth of 2% to 3% and total sales growth of 7% to 8%, compared with the same period a year ago. EPS is forecast at $0.72 to $0.74 for the quarter.

Dollar General expects to open 700 new stores in 2014 and capex spending is estimated in a range of $450 million to $500 million. The company opened 650 new stores in 2013 and remodeled or relocated 582 stores.

The company’s CEO said:

Sales in the fourth quarter were impacted by severe winter weather, including many days with significant store closures, an aggressive competitive retail landscape and our customers’ uncertainty about spending in the current economic environment. In spite of these headwinds, both customer traffic and average ticket increased in our same-stores in the fourth quarter. … Dollar General is a strong and growing business with high return store growth opportunities that we intend to capture. While we remain cautious on the current operating environment and the many challenges our customer is facing in 2014, we have a business model that generates significant cash flow, putting us in a position to invest in these growth opportunities, while continuing to return cash to shareholders through share repurchases.

Shares were down about 2.5% in premarket trading Thursday, at $58.00 in a 52-week range of $47.46 to $62.93. Thomson Reuters had a consensus analyst price target of $65.70 before the results were announced.