Dollar General earnings, sales miss; cites 'financially constrained' customer
Dollar General reported disappointing second-quarter earnings, revenue and same-store sales and slashed its full-year outlook as its core customers continue to cut back discretionary spending.
Dollar General’s expansion plans remain on track, with plans for 730 new store openings, 1,620 remodels and 85 store relocations planned for the year. It opened 213 new stores, remodeled 478 stores and relocated 25 stores during the second quarter.
Net income fell to $374.2 million, or $1.70 a share, for the quarter ended Aug. 2, from $468.8 million, or $2.13 a share, in the year-ago quarter. Analysts had expected earnings per share of $1.79. Net sales rose 4.2% to $10.21 billion, missing estimates of $10.37 billion.
Same-store sales inched up 0.5% as an increase in customer traffic offset a decrease in the average transaction amount. Seasonal, home and apparel were among the weaker categories.
As of Aug. 2, total merchandise inventories, at cost, were $7.0 billion compared to $7.5 billion as of August 4, 2023, a decrease of 11.0% on a per-store basis.
“Despite advancing several of our operational goals and driving positive traffic growth, we are not satisfied with our financial results, including top line results below our expectations for the quarter,” said Todd Vasos, Dollar General CEO. “While we believe the softer sales trends are partially attributable to a core customer who feels financially constrained, we know the importance of controlling what we can control. With the evolving retail and consumer landscape in mind, we are taking decisive action to further enhance our value and convenience offering, as well as the in-store experience for our associates and customers.”
Dollar General cut its full-year guidance ranges for earnings per share to $5.50 to $6.20 from its previous range of $6.80 to $7.55. It now expects net sales growth of 4.7% to 5.3%, down from from 6% to 6.7%, and and for same-store sales growth of 1% to 1.6%, down from from 2% to 2.7%.
As of Aug. 2, the company operated 20,345 Dollar General, DG Market, DGX and PopShelf stores across the United States and Mi Súper Dollar General stores in Mexico.
