Dollar General Earnings Edge Above Expectations
August 27 2015 - 8:10AM
Dow Jones News
Dollar General Corp.'s profit edged above expectations for its
second quarter, though revenue growth missed views despite
continued gains in store traffic and transaction value.
Dollar General is seeing more people visit its stores and growth
in profitable categories as its core customers benefit from things
such as wage growth, lower unemployment and cheap gas.
Meanwhile, the company is 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
Target Corp. pick up traffic.
In the latest quarter, Dollar General's sales at existing
locations grew 2.8%. The company said items such as candy and
snacks, tobacco products and seasonal items also saw growth.
Analysts, however, had expected same-store sales to increase by
3.6%, according to Consensus Metrix.
Gross margin ticked up to 31.2% from 30.8% a year earlier amid
higher inventory markups and lower transportation costs.
Overall, Dollar General posted a profit of $282.3 million, or 95
cents a share, up from $251.3 million, or 83 cents a share, a year
earlier.
Sales grew 7.9% to $5.1 billion.
Analysts polled by Thomson Reuters had projected earnings of 94
cents a share and revenue of $5.14 billion.
The company backed its outlook for the year.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 27, 2015 07:55 ET (11:55 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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