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GOODLETTSVILLE, Tenn. – Dollar General Corp. posted second-quarter sales and earnings that missed Wall Street’s expectations. The company lowered its full-year guidance on expectations that its customers will remain “financially constrained” in the months ahead.
Dollar General said sales increased 4.2% to $10.2 billion in the 13 weeks to August 2. The increase was primarily driven by contributions from new stores and an 0.5% bump in same-store sales. An increase in customer traffic was partially offset by a decline in average transaction amount.
Operating profit declined 20.6% to $550 million. DG attributed the slide to increased markdowns, increased inventory damages, a greater proportion of sales coming from the consumables category, and increased shrink.
“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,” CEO Todd Vasos said. “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 now expects full-year net sales to increase in the range of 4.7% to 5.3%, a downward revision from the earlier forecast of growth in the range of 6% to 6.7%.
Same-store sales growth of between 1% and 1.6% is now expected for the full year, down from the earlier forecast of between 2% and 2.7%.
DG opened 213 new stores, remodeled 478 stores, and relocated 25 stores in the second quarter.
Total additions to property and equipment in the 26 weeks to August 2 were $696 million, including $255 million for improvements, upgrades, and remodels of existing stores. DG allocated $216 million related to store facilities, primarily for leasehold improvements, fixtures and equipment in new stores. The retailer also spent $199 million for distribution and transportation-related projects, and $20 million to upgrade information systems and technologies.
“Dollar General has a long history of serving customers in a variety of macroeconomic environments, and we believe the actions we are taking will allow us to further strengthen our position and build on our Back to Basics progress, as we seek to deliver sustainable growth and long-term shareholder value,” Vasos said.
