Dollar General cites weather as Q1 profit, sales miss Street
Dollar General missed analysts’ expectations in its first quarter as the delayed spring took a toll on sales.
The company’s net income fell 20% to $365 million, with earnings per share of $1.36, for the quarter ended May 4, compared to net income of $279 million, or earnings per share of $1.02, in the year-ago period. Analysts had been looking for $1.40 per share.
Net sales increased 9.0% to $6.1 billion. Same-store sales increased 2.1%, less than analysts had expected.
Sales growth was driven by robust sales of consumables, which partially offset sales declines in the apparel, seasonal and home categories. Dollar General said the unseasonably cold and damp spring cut into sales on certain product categories and negatively impacted same-store sales in the quarter. A host of other retailers have also cited the weather in reporting less than expected first quarter results.
“Our team delivered strong net sales growth, a solid same-store sales increase, and gross margin expansion, while continuing to execute our cost containment strategy,” said Todd Vasos, Dollar General’s CEO. “We are proud of our execution and solid performance, particularly given the significant weather-related headwind we faced during the first quarter.”
Dollar General reiterated its previously-issued full-year financial guidance. The company expects net sales to increase approximately 9%, with same-store sales growth estimated to be in the mid-two percent range. It expects fiscal year 2018 diluted EPS to be in the range of $5.95 to $6.15 (The EPS guidance assumes an estimated effective tax rate of 22% to 23%.)
During the quarter, Dollar General opened 241 new stores, remodeled 322 stores and relocated 31 stores. For the full year, it plans to open approximately 900 new stores, remodel 1,000 stores and relocate 100 stores. Dollar General operated 14,761 stores in 44 states as of May 4, 2018.
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