Dollar General Tops Views Amid Continued Sales Improvement
May 26 2016 - 8:40AM
Dow Jones News
Dollar General Corp. on Thursday posted earnings for the most
recent quarter well above market views as sales at the discount
retailer continued to climb and margins improved.
Shares in the company added 3.4% to $87 in light premarket
trading.
During the quarter, same-store sales rose 2.2%, helped by
increases in both customer traffic and average transaction
amount.
The sales improvement marks a departure from other,
higher-priced retailers reporting a disappointing start to the
year. Chains from J.C. Penney Co. to Target Corp. posted sluggish
sales as consumers cut back spending. Years after the global
financial crisis, Dollar General still finds itself picking up more
customers drawn to lower prices for smaller-size items that are
sold closer to their homes.
"We remained keenly focused on ensuring the effectiveness and
efficiency of every aspect of our business" as the company cut
costs and improved its margins, said Chief Executive Todd Vasos.
"We are confident in our opportunities for growth."
In all, Dollar General posted a profit of $295.1 million, or
$1.03 a share, up from $253.2 million, or 84 cents a share, a year
earlier. Sales grew 7% to $5.27 billion.
Analysts polled by Thomson Reuters had projected earnings of 95
cents a share on revenue of $5.28 billion.
Gross margin rose to 30.63% from 30.47%, mostly owing to higher
initial inventory markups and cheaper fuel for transportation.
Overhead expenses as a percentage of sales narrowed to 21.5% versus
21.8% in the quarter a year ago.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
May 26, 2016 08:25 ET (12:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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