Retail

Why Dollar General's Q3 Results Were Not Enough

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Dollar General Corp. (NYSE: DG) reported its fiscal third-quarter financial results before the markets opened on Tuesday. The discount retailer said that it had $1.26 in earnings per share (EPS) and $6.42 billion in revenue, which compares with consensus estimates of $1.26 in EPS and revenue of $6.38 billion. In the same period of last year, the discount retailer said it EPS of had $0.93 and $5.90 billion in revenue.

During the most recent quarter, net sales increased 8.7% year over year. Same-store sales increased 2.8% in the same time, driven by an increase in average transaction amount and positive results in the consumables, seasonal and home categories, partially offset by sales declines in the apparel category. Customer traffic was essentially flat.

Dollar General repurchased $298 million of its common stock, or 2.8 million shares, under its share repurchase program in the third quarter of 2018. The total remaining authorization for future repurchases was about $706 million at the end of the third quarter of 2018.

Looking ahead to the 2018 fiscal full year, the company expects to see EPS in the range of $5.85 to $6.05 and net sales growth of roughly 9.0%. Consensus estimates call for $6.11 in EPS and $25.56 billion in revenue for the year.

Todd Vasos, Dollar General’s CEO, commented:

During the third quarter, we delivered strong operating performance and financial results. I am particularly proud of our team’s dedication to our mission of Serving Others, which was on display this quarter as employees across our organization rallied to help our communities in need during the aftermath of two devastating hurricanes. Despite the challenges created by these weather events in the quarter, we achieved strong top-line growth and remained focused on expense control. Both consumables and non-consumables categories drove our financial performance this quarter, and we achieved our highest two-year same-store-sales stack in 11 quarters.

Shares of Dollar General closed Monday at $111.70. The stock has a 52-week trading range of $85.54 to $118.45 and a consensus analyst price target of $117.75. Following the announcement, the stock was down 6% at $104.66 in early trading indications Tuesday.

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