Dollar General Company Earnings: Outlook Weighs on Shares
Dollar General Corp. (NYSE: DG) reported first-quarter 2013 results before markets opened this morning. The discount retailer posted adjusted diluted earnings per share (EPS) of $0.71 on revenues of $4.23 billion. In the same period a year ago, Dollar General reported EPS of $0.63 on revenue of $3.9 billion. First-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.71 and $4.24 billion in revenue.
The company said that same-store sales rose 2.6% in the first quarter, primarily driven by increased sales of consumables. Sales of seasonal and weather-sensitive goods were soft.
In its guidance for the 2013 fiscal year, Dollar General said it expects sales to rise 10% to 11% over 2012 totals, with same-store sales up 4% to 5%. Both estimates are one point lower on the high end that at the beginning of the first quarter.
Full-year gross profit is expected to decrease about 90 basis points from 2012 levels. Gross profit in the first quarter was 30.6%, down 89 basis points from the same period in 2012.
EPS for the full year is expected to come in at $3.15 to $3.22, well below the current analysts' consensus estimate of $3.28.
The company's CEO put a happy face on the lowered expectations:
We have updated our outlook for the year to reflect moderating sales growth and a lower expected gross profit rate than we previously anticipated. We are well positioned for our same-store sales growth to accelerate to four to five percent for the year as our key initiatives, such as the rollout of tobacco …, continue to gain traction through the year. Sales of non-consumables are expected to remain challenging, and we anticipate a continued shift to lower margin items within consumables and higher inventory shrink.
Dollar General repurchased $20 million in its own stock in the first quarter and now has approximately $624 million available for share repurchases.
Shares are down nearly 5% in premarket trading this morning at $50.98, in a 52-week range of $39.73 to $56.04. Thomson Reuters had a consensus analyst price target of around $58.85 before today's results were announced.
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