Dollar General Q2 Profit Rises, Backs Full Year Forecast

(RTTNews) - Discount retailer Dollar General Corp. (DG) Wednesday reported higher profit for the second quarter, helped by a more than 11 percent growth in sales. The company backed its full year forecast.

Net income for the quarter increased to $245.48 million from $214.14 million. Earnings per share climbed to $0.75 from $0.64.

Adjusted profit was $251 million or $0.77 per share, while it totaled $231 million or $0.69 per share last year. On average, 28 analysts polled by Thomson Reuters expected earnings of $0.74 per share for the quarter. Analysts' estimates typically exclude special items.

Last year's reported and adjusted net income included a benefit of $0.04 per share relating to an adjustment of accruals resulting from the favorable resolution of income tax audits.

Net sales increased to $4.394 billion from $3.949 billion, exceeding the analysts' estimate of $4.36 billion.

Same-store sales increased 5.1 percent, with increases in customer traffic and average transaction value. Sales of Consumables continued to increase at a higher rate than non-consumables, with the most significant growth in the newly introduced tobacco products. Perishables as well as candy and snacks saw strong sales.

Same-store sales growth was solid in seasonal and apparel, and the trend in home products improved sequentially.

Rick Dreiling, CEO, said, "Our same-store sales growth for the second quarter of 2013 accelerated to 5.1 percent. We are very pleased with the increase in customer traffic in our stores. We continue to grow our market share and believe that our second quarter results position us well to deliver our financial outlook for the year."

Gross profit decreased 65 basis points to 31.3 percent due to an increase in the mix of consumables and increased sales of lower margin consumables. In addition, the company's inventory shrinkage rate increased.

Looking ahead, the retailer still expects adjusted annual earnings of $3.15 to $3.22 per share. The company expects total sales to increase 10 to 11 percent over 2012. Same-store sales are expected to increase 4 to 5 percent. Wall Street looks for full year earnings of $3.21 per share on revenues of $17.67 billion.

The company plans to open approximately 650 new stores, an increase from the previous estimate of 635 new stores.

DG closed at $53.88 on Tuesday.