Discount retailer Dollar General Corp reported a better-than-expected quarterly profit as more customers came through the door and spent more on average while lower utilities costs and tax rate helped put a lid on expenses.
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The company's shares were up 4.6 percent at $88 in premarket trading on Thursday, also helped by a 7 percent jump in quarterly sales.
Dollar General and rival Dollar Tree were expected to have done well in the first quarter as their core low-income customer base spent more on basic items such as food.
This came in contrast to results from department stores such as Macy's Inc and Target Corp, which reported weak quarterly sales, citing unseasonable weather and lower demand for apparel and electronics.
"The dollar stores, having little to no AMZN exposure, generating a very small share of sales from apparel, and catering to the low-income consumer, are likely to avoid much of the 1Q retail malaise," Sterne Agee CRT's Renato Basanta wrote in a pre-earnings note.
Sales at Dollar General stores open at least 13 months rose 2.2 percent, below the 2.4 percent growth expected by analysts polled by research firm Consensus Metrix.
Net sales rose to $5.27 billion from $4.92 billion, short of the $5.28 billion estimated by analysts on average, according to Thomson Reuters I/B/E/S.
The company's net income rose to $295.1 million, or $1.03 per share, in the first quarter ended April 29, from $253.2 million, or 84 cents per share, a year earlier.
Analysts on average had expected earnings of 95 cents per share.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Don Sebastian)