Dollar General reports strong Q3 store sales

Dollar General reported its best quarterly same-store sales rise in nearly five years along with increases on both its top and bottom lines.  

Net income totaled $365.6 million for the quarter ended Nov. 1, compared to $334.1 million the year-ago period. Earnings per share increased 12.7% to $1.42, topping analysts' estimates of $1.38.

Net sales increased 8.9% to $6.99 billion, beating estimates of $6.92 billion. Same-store sales increased by 4.6%, driven by increases in both average transaction amount and customer traffic. The company cited growth in the consumables, seasonal, home, and apparel categories.

“The quarter was highlighted by our best customer traffic and same-store sales increases in nearly five years, as well as double-digit growth in both operating profit and diluted EPS,” Todd Vasos, Dollar General’s CEO said. “We continue to execute well on many fronts, while maintaining our focus on delivering value and convenience for our customers. As a result of our performance through the first three quarters of 2019 and outlook for the fourth quarter, we are raising our full-year financial guidance as we work to finish a strong year.”

The company updated its financial guidance, which includes the anticipated impact of previously implemented tariff rates on certain products imported from China, and the additional tariffs expected to become effective on December 15, 2019.  It noted that its forecast assumes that it can successfully mitigate, absorb, or otherwise offset the impact of these tariffs.

For fiscal year 2019, Dollar General now expects the following:

• Net sales growth in the low 8% range, compared to its previous expectation of approximately 8%;
• Same-store sales growth in the mid-to-high 3% range, compared to its previous expectation in the low-to-mid 3% range; and
• Adjusted earnings per share in the range of $6.55 to $6.65, compared to its previous range of $6.45 to $6.60.

Analyst Neil Saunders, managing director of GlobalData Retail, commented that Dollar General’s solid bottom line show that the chain is “successfully managing the challenge of tariffs through a combination of expense management, volume expansion, and driving a higher proportion of own-brand sales.”

"Overall, we believe this bodes well for 2020 and means Dollar General will retain its edge compared to rivals,” he said.