DOW JONES NEWSWIRES
Dollar General Co.'s fiscal second-quarter profit more than tripled on higher margins and an 8.6% jump in same-store sales as consumers continue to trade down for basic staples amid the weak economy.
The company also announced plans to boost store openings and remodelings/relocations by 50 each to 500 and 450, respectively. That boosted Dollar General's projected capital spending for the year by $50 million to as much as $325 million.
The quarterly results were much better than rivals such as Family Dollar Stores Inc. (FDO) and Dollar Tree Inc. (DLTR), which have also been benefiting from the economic downturn.
While retailers higher up the price scale retrench to reflect slumping sales, Dollar General plans to raise its store count by 450 this year. The company, owned by buyout firm Kohlberg Kravis Roberts & Co., is poised to return to the public market through what may end up as the largest U.S. initial public offering by an operating company this year.
Chairman and Chief Executive Rick Dreiling said the results reflect consumer response to store changes and its ability to grow. The company had 8,577 stores when the quarter ended July 31.
For the latest period, Dollar General's profit surged to $93.6 million from $27.7 million. Revenue climbed 11% to $2.91 billion. Gross margin rose to 31.2% from 29.1% amid higher average markups and more sales of private-brand items.
-By Mike Barris and Kevin Kingsbury, Dow Jones Newswires; 212-416-2330; mike.barris@dowjones.com