Dollar General Posts Higher 1Q Profit, Confirms View
Dollar General (NYSE:DG) posted a 15% rise in fiscal first-quarter earnings and backed its financial guidance, but the discount retailer’s non-GAAP EPS trailed consensus calls from analysts and it warned of further gross margin trouble amid higher costs.
The Goodlettsvile, Tenn.-based company said it earned $157 million, or 45 cents a share, in the quarter ended April 29, compared with a profit of $136 million, or 39 cents a share, a year earlier.
Excluding one-time items, it earned 48 cents a share, missing the Street’s view by 2 pennies.
Sales increased 11% to $3.45 billion, narrowly surpassing estimates for $3.42 billion. Same-store sales grew by a more modest 5.4%.
Hurt by higher costs and incentives, gross margins shrank to 31.5% from 32.1%.
“Dollar General is off to a great start in 2011,” CEO Rick Dreiling said in a statement. “We maintained our focus on serving our customers and worked to hold the line where we reasonably could when it came to raising prices in an environment of rising commodity and fuel costs.”
Looking ahead, Dollar General still sees full-year non-GAAP EPS of $2.20 to $2.30, compared with the Street’s view of $2.26.
Dollar General forecasted 2011 sales jumping 11% to 13%, but same-store sales increasing just 3% to 5%. The company warned it sees the first-quarter gross margin trends continuing through the second quarter.
“In spite of expected gross margin headwinds, we remain well positioned to deliver on our financial outlook for fiscal 2011 as we invest for the long-term health of the Company,” Dreiling said.
Shares of Dollar General, which were inactive in Wednesday’s premarkets, have rallied nearly 15% so far in 2011.