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Dollar General Q3 tops Street; reveals 2019 store plans

BY Marianne Wilson

Dollar General reported better-than-expected third quarter sales and earnings, but cut its full-year outlook on hurricane-related costs.

The discounter also revealed its expansion plans for the upcoming year. It plans to undertake some 2,075 real estate projects in 2019, including 975 new store openings (up from 900 in 2018), 1,000 mature store remodels, and 100 store relocations.

“We remain very excited about our future real estate growth opportunities,” said CEO Todd Vasos. “We believe our ongoing investment in high-return real estate projects, along with our strategic initiatives, will not only continue to drive long-term shareholder value, but will also allow us to further enhance our ability to serve our communities and our customers.

Dollar General’s net income rose to $334.1 million, or $1.26 a share, for the quarter ended Nov. 2, from $252.5 million, or 93 cents a share, in the same period a year ago. Excluding a 5 cents-per-share negative impact from hurricane-related expenses, earnings per share came in at $1.31. Analysts had expected earnings per share of $1.27.

“As a result of the third quarter hurricanes and other disasters, we will record greater-than-anticipated expenses in the second half of 2018,” said John Garratt, Dollar General’s CFO. “In total, the impact to third quarter EPS was an estimated $0.05 per diluted share and we expect to see an additional estimated $0.04 impact on our fourth quarter diluted EPS. We have adjusted our full-year outlook to reflect the estimated $0.09 impact of these events, ongoing transportation cost pressures and year-to-date results.”

Third quarter sales increased 8.7% to $6.42 billion, above estimates of $6.39 billion. Same-store sales rose a better-than-expected 2.7%, driven by an increase in average transaction amount and positive results in the consumables, seasonal and home categories. Customer traffic was essentially flat, the company said.

For fiscal 2018, Dollar General lowered its sales growth outlook to just 9.0% from 9.0% to 9.3% and cut its earnings per share guidance to $5.85 to $6.05 from $5.95 to $6.15. It expects same-store sales growth to be in the middle of the previous range of mid-to-high two percent.

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Report: Neiman Marcus restructuring talks end

BY Marianne Wilson

Neiman Marcus Group and its lenders have ended their debt negotiations — at least for now.

The discussions between the luxury department store retailer and its lenders and bondholders ended nearly after a month with no deal to extend debt maturing in the next two to three years, the Wall Street Journal reported.

Neiman Marcus has been struggling under the burden of approximately $4.7 billion in long-term debt, almost all of which comes due in 2020 and 2021. The retailer has been in discussions since late fall with groups of creditors about various options, including one that would it give it more time to pay back its loan.

Although the talks have ended, Neiman Marcus still has time to try and get the debt extended, MarketWatch reported.

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Outdoor apparel company donates its entire Trump tax cut savings to environmental groups

BY Marianne Wilson

Patagonia is making a big statement about climate change — one with $10 million attached to it.

The outdoor clothing and gear company said it will donate the $10 million it saved in recent tax cuts to environmental groups. In a letter on LinkedIn, CEO Rose Marcario said that “based on last year’s irresponsible tax cut,” Patagonia will owe $10 million less in taxes this year. Instead of putting the money back into its business, she explained, the company is putting the $10 million back into its planet.

“Our home planet needs it more than we do,” said Marcario.

In a company statement, Patagonia said the planet is in peril because of human-caused climate disruption, and noted its support of the recent non-partisan National Climate Assessment report, which was largely dismissed by President Trump. The report warns that, without action, climate change will cause “substantial damages to the U.S. economy, environment, and human health and well-being over the coming decades.”

In her LinkedIn post, Marcario did not mince words.

“Far too many have suffered the consequences of global warming in recent months, and the political response has so far been woefully inadequate — and the denial is just evil,” she said.

Patagonia will donate the $10 million to group’s defending the planet’s air, water, and land as well as those involved in the regenerative organic agricultural movement.

Patagonia has long been a supporter of environmental causes. Since 1985, the company has funded grassroots activism through its participation in 1% for the Planet, a pledge for businesses to donate 1% of sales to sustainability-oriented nonprofits. It was founded by Patagonia founder Yvon Chouniard.

Since the 2016 presidential election, however, the company has not shied away from taking a more activist stance and wading into politics. In 2017, it announced plans to sue the president after he withdraw the protected status of some 2 million acres of land that make up national monuments in Utah. Most recently, it made the first political endorsements in its history, endorsing two Democrats running for the U.S. Senate — Jacky Rosen in Nevada and Senator Jon Tester in Montana — for their stances on protecting public lands. Both were elected.

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