“”Dollar General is having a great year,” said Rick Dreiling, chairman and ceo, “Even as the macroeconomic environment continues to be volatile for our customers, our strong results are top-tier among retailers.”
‘Highly Promotional Environment’
As a result the retailer, which sells branded and private label merchandise including basic apparel and accessories, has raised its full year earnings guidance to the range of $1.78 to $1.81 per share. Net income in the three months ended October 30 was $128 million or $0.37 per share, up from $76 million or $0.24 per share, a year ago.
Net sales increased 10.1% to $3.22 billion compared to a prior-year gain of 13%. Analysts’ average estimates forecast a profit of 35 cents on $3.23 billion in revenue.
Although same-store sales were up 4.2% but below following a prior-year gain of 9.2%. it was the slowest rate of same-store sales growth since the fourth quarter of 2007 and below its expectation of a 5% gain and below the 5.1% growth in its second quarter.
The biggest of the dollar store retailers with 9,273 discount stores competes against majors such as Walmart and drugstore chains like Walgreen Co. The retailer faced “a highly promotional retail environment,” Dreiling told analysts on a conference call today. He predicted consumers will delay most holiday purchases until late in the season.
Gross profit rate rose to 31.4% of sales from 30.8% last time, as reduced purchase costs combined with higher sales and mark-ups. Sales of consumable items–Dollar General’s biggest top-line contributor–jumped 11% while seasonal items increased 8.5%.
The company projected that same-store sales will rise about 5% in the current quarter.