Dollar General Q1 Results Miss Estimates, Cuts FY23 View; Stock Down In Premarket

(RTTNews) – Retailer Dollar General Corp. (DG) on Thursday reported weak profit in its first quarter, below market estimates, despite higher net sales and same store sales. The top line also missed the Street view.

Further, the company revised down its fiscal 2023 forecast to reflect more challenging macroeconomic headwinds, though it remains confident in the business and its long-term growth prospects.

In pre-market activity on the NYSE, Dollar General shares were losing around 8.5 percent to trade at $184.

For the first quarter, net income was $514.4 million, a decrease of 6.9 percent from last year’s $552.7 million. Earnings per share decreased 2.9 percent to $2.34 from $2.41 last year.

On average, 23 analysts polled by Thomson Reuters expected earnings of $2.38 per share for the quarter. Analysts’ estimates typically exclude special items.

Net sales increased 6.8 percent to $9.34 billion from $8.75 billion last year, primarily driven by positive sales contributions from new stores and growth in same-store sales, partially offset by the impact of store closures. The Street was looking for sales of $9.46 billion for the quarter.

Same-store sales increased 1.6 percent compared to the first quarter of 2022, driven by an increase in average transaction amount, partially offset by a decrease in customer traffic.

For fiscal 2023, the company now expects earnings per share in the range of an approximate 8 percent decline to flat, compared to its previous expectation of growth of approximately 4 percent to 6 percent.

Both outlook include an anticipated negative impact of approximately four percentage points due to lapping the fiscal 2022 53rd week

Net sales growth is now expected in the range of approximately 3.5 percent to 5.0 percent, compared to its previous growth expectation of 5.5 percent to 6 percent. The forecast includes negative impact of approximately two percentage points due to lapping the fiscal 2022 53rd week.

Same-store sales growth would be in the range of approximately 1.0 percent to 2.0 percent, compared to its previous expectation of 3.0 percent to 3.5 percent.

Capital expenditures, including those related to investments in the company’s strategic initiatives, are projected in the range of $1.6 billion to $1.7 billion, lower than previous expectation of $1.8 billion to $1.9 billion.

There won’t be any share repurchases in 2023, as compared to its previous expectation of share repurchases of approximately $500 million.

Dollar General is also reducing the number of expected new store openings in the pOpshelf format in 2023 to 3,110 real estate projects, compared to the previous expectation of 3,170 real estate projects.

On May 30, the Company’s Board of Directors declared a quarterly cash dividend of $0.59 per share, payable on or before July 25 to shareholders of record on July 11.

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