Discount retailer Dollar General beat earnings estimates in the second quarter and has lifted its sales outlook for the rest of the year as bargain-hunting shoppers increasingly flock to the growing chain for groceries and other consumables.
The company posted earnings per share of $2.98, up 10.8% from a year ago and surpassing Wall Street estimates of $2.39. DG's revenue rose 9% year-over-year for the quarter ending in July to $9.4 billion, matching estimates from analysts surveyed by Refinitiv.
|DG||DOLLAR GENERAL CORP.||132.28||-1.66||-1.24%|
"We are pleased with our second quarter results, and I want to thank our associates for delivering another quarter of strong performance during a period of inflation and economic uncertainty," Dollar General CEO Todd Vasos said Thursday in a statement announcing the results. "The quarter was highlighted by same-store sales growth of 4.6%, a slight increase in customer traffic, accelerated growth in market share of highly consumable product sales, and double-digit growth in EPS."
The company maintained its profit forecast for the rest of the year.
Consumers under pressure from inflation are increasingly buying necessities like groceries and gas and have less left in their budgets for items like apparel and housewares. While sales remain strong in the retail sector, several companies — like Target and Dollar Tree — are lowering their profit outlooks as they lower prices to unload excess merchandise.
Dollar General's strong quarter shows the company has positioned itself well in relation to rivals in the discount space as retailers navigate soaring prices while competing to deliver value for cash-strapped customers.
The company's move to offer more groceries has made it more attractive as a one-stop shop as elevated gas prices push more consumers to make fewer trips.
Data firm Placer.ai reported Dollar General's introduction of groceries in 2019 helped drive foot traffic to the chain and has made the company a formidable contender in the grocery category.
Ethan Chernofsky, VP of Marketing at Placer.ai, says data shows Walmart dominates the foot traffic market share. As the nation's largest retailer, it has fluctuated holding somewhere between 67% and 70% of visit share for the month of July since 2019.
But Dollar General is gaining ground, growing its foot traffic share from around 7.5% to nearly 10% over the past three years.
"This is not a knock on Walmart," Chernofsky told FOX Business. "It just [shows the] real growing power within the retail space that is Dollar General."