Dollar General beats expectations amid traffic increase; increasing store remodels
Dollar General reported better-than-expected profit, sales and same-store sales for its first-quarter as more customers shopped its stores for groceries and other essentials.
“These results were driven by strong customer traffic growth and market share gains during the quarter, which we believe is a testament to the relevance of our unique combination of value and convenience, as well as to improved execution across our organization,” said Todd Vasos, CEO of Dollar General.
The discounter, which opened 197 stores during the quarter, also revised its new stores and remodels forecast in an effort “to better optimize the planned capital expenditures for fiscal year 2024 and to expand the investment in mature stores.”
Dollar General now plans to open 730 new stores, down from its previous expectation of 800 openings. It expects to remodel 1,620 stores, up from its previous forecast of 1,500. (Store relocations remain the same at 85.) In total, Dollar General expects to execute 2,435 real estate projects this year, compared to its previous expectation of 2,385 real estate.
Net income fell to $363.3 million, or $1.65 a share, for the quarter ended May 3, from $514.4 million, or $2.34 a share, in the year-ago period. Analysts had expected earnings per share of $1.58.
Net sales rose 6.1% to $9.91 billion, topping estimates of $9.89 billion.
Same-store sales increased 2.4%, also more than expected, driven by an increase in customer traffic, partially offset by a decrease in average transaction amount. Growth in the consumables category was partially offset by declines in the home products, seasonal and apparel categories.
"While it is still early in our fiscal year, we are encouraged by our first quarter financial results,” said Kelly Dilts, Dollar General CFO. “Although we are experiencing shrink and sales mix headwinds that are greater than we had initially anticipated coming into the year, we are working to mitigate the impact of these challenges and are reiterating our full-year financial guidance as we remain focused on our goal of delivering consistent, strong financial performance.”
For fiscal 2024, the company expects earnings per share to range from $6.80 to $7.55, with net sales growth of 6% to 6.7%. Same-store sales growth is expected to be in the range of 2.0% to 2.7%.
As of May 3, 2024, the company operated 20,149 Dollar General, DG Market, DGX and PopShelf stores across the United States and Mi Súper Dollar General stores in Mexico.