Same store sales increased 5.1% at Dollar General during the second quarter and the company remains on track to open more than 600 new stores this year.
Sales increased 10.4% to $3.95 billion during the second quarter ended August 3, thanks to the combination of same store sales growth and the addition of new stores. Net income increased 47% to $214 million in the second quarter compared to $146 million the prior year and earnings per share increased 52% 64 cents, inline with analysts’ consensus estimated, compared to 42 cents the prior year.
"Our same-store sales increase of 5.1% demonstrates the ongoing execution of the initiatives around our key operating priorities and is evidence of our continued importance to our customers," said Dollar General chairman and CEO Rick Dreiling.
Dollar General continues to expand it footprint at a breakneck pace. At the midpoint of the company’s fiscal year, Dollar General has opened 295 new stores and remodeled or relocated 416 others and ended the period with a total of 10,203 units. Full year plans remain on track to open roughly 625 new stores, including 40 Dollar General Market stores. However, the company increased slightly plans to remodel or relocate approximately 575 stores, compared to an earlier estimate of 550 stores.
The second quarter performance prompted the company to narrow the range of its anticipated full year same store sales growth to 4% to 5% from prior guidance that called for a 3% to 5% gain. The company also raised its full year earnings guidance to a range of $2.77 to $2.85 from a previous range of $2.68 to $2.78, due partly to a four cent a share benefit related to settlement of an income tax audit in the second quarter.
"We are well positioned to continue to broaden our appeal to more customers and to provide them with convenience and everyday low prices they can depend on," Dreiling said.
From a category perspective, Dollar General said consumables sales continued to increase at a higher rate than non-consumables with the most significant growth related to changes in and further expansion of the company’s candy and snacks and perishable foods. Sales growth was also strong in the home and seasonal categories, as well as certain departments in apparel, including accessories, sleepwear and intimates.
The gross margin rate of 32% was essentially flat with the prior year’s 32.1% figures and that was the case with expenses too which stood at 22.2% of sales in the second quarter compared to 22.3% the prior year.