Expectations elevated at Dollar General
It’s been one extreme or another the past few weeks in the retail world. First, luxury retailers Tiffany and Saks reported strong sales and profits and then on Tuesday Dollar General results showed the low-end consumers have some spending power and a taste for its brand of discount retail.
Sales increased 11.2% to $3.58 billion at the company’s 9,641 stores, same-store sales increased 5.9%, and net income increased 25% to $181 million, excluding non-recurring charges related to the early repayment of debt. On that same basis, earnings per share increased to 52 cents, four cents better than analysts expected and nearly 24% higher than the prior year profit of 42 cents.
Analysts noted the positive variance was due to such wide ranges of factors as the better-than-expected 5.9% same-store sales increase, less-than-expected gross margin contraction and effective expense leverage.
“Our same-store sales increase of 5.9% in the quarter represents an acceleration from the first quarter and demonstrates our ability to balance the challenges of pricing and rising input costs. Our customers are depending on us even more for the convenience and value we offer,” said Rick Dreiling, Dollar General chairman and CEO. “In this period of economic uncertainty, we continue to focus on factors that we can control, and we still expect to deliver strong financial performance in 2011.”
Accordingly, the company increased it full year profit guidance to incorporate the sec