Dollar General posts tough quarter; slashes guidance
![Dollar General storefront](jpg/dollar%20general%202f8b0.jpg)
Dollar General Corp. reported weaker-than-expected second-quarter earnings and sales and cut its full-year guidance as its shoppers continued to focus on lower-priced everyday essentials over discretionary goods.
Echoing other retailers’ warnings about shrink, the discounter said an increase in product theft has cut into its its profit.
Despite its soft results, Dollar General remains committed to expansion. It opened 215 stores during the quarter and is track to open 990 stores for the full year, along with 2,000 remodels.
The company reported net income of $468.8 million, or $2.13 a share, for the quarter ended Aug. 4, down from $678.0 million, or $2.98 a share, in the year-ago period. Analysts had expected earnings per share of $2.47.
Net sales rose 3.9% to $9.796 billion from $9.426 billion, missing estimates of $9.926 billion.
Same-store sales fell 0.1%, driven by a decline in customer traffic. The retailer also cited declines in discretionary categories such as home, seasonal and apparel, which was partially offset by growth in the consumables. In June, Dollar General said it wasexpanding its private label food and beverage brand, Clover Valley, as part of its “Food First” initiative.
“While we are not satisfied with our overall financial results, we made significant progress in the second quarter improving execution in our supply chain and our stores, as well as reducing our inventory growth rate and further strengthening our price position,” said Jeff Owen, CEO, Dollar General.“These actions were an important driver of improving customer traffic trends and growing total market share in the second quarter. In addition, we executed nearly 850 real estate projects during the quarter, further extending our reach and expanding our ability to serve both new and existing customers.”
The retailer lowered its full-year guidance. It now expects sales growth to be in the range of 1.3% to 3.3%, down from its prior guidance of up 3.5% to 5.0%. It expects earnings per share of $7.10 to $8.30, or a decline of 34% to 22%, compared with prior guidance for a decline of about 8% to flat growth.
Same-store sales are expected to fall to up about 1%, compared with prior guidance of growth of 1% to 2%.
As of August 4, 2023, the company operated 19,488 Dollar General, DG Market, DGX and PopShelf stores across the United States and Mi Súper Dollar General stores in Mexico.