Dollar General Q2 Profit Climbs, Meets View

(RTTNews) - Discount retailer Dollar General Corp. (DG) Thursday said second-quarter profit increased from the prior year, amid higher revenues. Looking ahead to the full year, the company backed its earnings and revenue forecast, while reducing the lower end of its same-store sales growth forecast.

Net income increased to $251.26 million or $0.83 per share from $245.48 million or $0.75 per share in the previous year. Adjusted net income totaled $251 million or $0.77 per share last year.

On average, 25 analysts polled by Thomson Reuters expected earnings per share of $0.83 for the quarter. Analysts' estimates typically exclude one-time items.

Net sales increased 7.5 percent to $4.72 billion from $4.39 billion. Analysts estimated quarterly revenues of $4.77 billion.

Same-store sales grew 2.1 percent, with increases in customer traffic and average transaction value. The remaining sales increase was attributable to new stores, partially offset by sales from closed stores.

Consumables sales continued to increase at a higher rate than non-consumables, and the most significant growth was related to tobacco products, perishables as well as candy and snacks.

Gross profit fell 53 basis points to 30.8 percent, mainly due to an increase in markdowns, amid higher promotional activities.

Additionally, consumables comprised a larger portion of net sales, primarily as a result of increased sales of lower margin consumables, including tobacco and perishable products.

Looking ahead to 2014, adjusted earnings per share is expected to be in the range of $3.45 to $3.55. Analysts project earnings per share of $3.51 for the year.

The company expects total sales to increase 8 to 9 percent from 2013, with same-store sales expected to increase 3 to 3.5 percent. In early June, the firm projected same-store sales growth of 3 to 4 percent.

The guidance does not include any expenses which may be incurred or reductions in the assumed share repurchases which may occur in connection with the company's proposal to acquire Family Dollar Stores, Inc. (FDO).

Family Dollar last week rejected Dollar General's takeover bid on antitrust concerns, but Dollar General has maintained its commitment to acquire Family Dollar.

DG closed up 0.3 percent on Wednesday at $63.70, but is down 1.1 percent in pre-market activity.