Dollar General Corp. posted a better-than-expected 14% increase
in profit in its first quarter as the discount retailer benefited
from higher traffic and customer spending.
Sales growth came in narrowly below Wall Street expectations,
but shares gained 2.9% in premarket trading as the company also
backed its full-year outlook.
The results come just a day before Dollar General's operations
chief, Todd Vasos, is set to assume the chief executive role,
replacing retiring CEO Rick Dreiling.
Dollar General is also bracing for heightened competition as
rivals Dollar Tree Inc. and Family Dollar Stores Inc. merge and is
ramping up spending on labor this year. Dollar General has said it
plans to increase the hours allocated to employees to help improve
the quality of stores and draw in traffic as big-box retailers like
Wal-Mart Stores Inc. and Target Corp. pick up traffic.
In the latest quarter, Dollar General's sales at existing
locations grew 3.7%, owing to higher traffic and transaction
amounts. The company said items like tobacco products, candy and
apparel helped drive growth in the metric.
Analysts, however, had expected same-store sales to increase by
4.1%, according to Consensus Metrix.
Gross margin ticked up to 30.5% from 30% a year earlier amid
higher initial prices and lower transportation costs.
Overall, Dollar General posted a profit of $253.2 million, or 84
cents a share, up from $222.4 million, or 72 cents a share, a year
earlier.
Sales grew 8.8% to $4.92 billion.
Analysts polled by Thomson Reuters had projected earnings of 81
cents a share and revenue of $4.94 billion.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
Access Investor Kit for Dollar General Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US2566771059
Access Investor Kit for Dollar Tree, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US2567461080
Access Investor Kit for Family Dollar Stores, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US3070001090
Access Investor Kit for KKR & Co. LP
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US48248M1027
Access Investor Kit for Target Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US87612E1064
Access Investor Kit for Wal-Mart Stores, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US9311421039
Subscribe to WSJ: http://online.wsj.com?mod=djnwires