Dollar General misses profit and sales forecasts By Joshua Jamerson
Published: Dec 1, 2016 8:26 a.m. ET
Dollar General Corp. reported another disappointing quarter of same-store sales and posted lower-than-expected earnings as the dollar store again blamed results on reductions in food-stamp benefits.
Shares, which have climbed 18% in the past 12 months, skidded 6.9% to $71.98 in premarket trading.
Dollar General Chief Executive Todd Vasos said the company is trying to boost performance by cutting prices to boost store traffic, with some promising early results, though he warned that a full benefit to same-store sales "will not be immediate." He said headwinds due to changes to food-stamp programs around the country, which crimped performance in the second quarter, accelerated in the latest quarter.
The Goodlettsville, Tenn., company said same-store sales fell 0.1% in the third period, as analysts polled by Consensus Metrix expected sales to edge up 0.8%. The company was also hurt again by falling food prices.
The results come as dollar stores have generally been a relative bright spot in a troubled retail sector as recession-weary shoppers flocked to low prices and convenient locations near residential areas. Rival chain operator Dollar Tree Inc., which acquired rival Family Dollar last year for about $9 billion, also reported a disappointing second quarter, though it said last week that sales for the last three months of the year would be better than expected.
Over all, Dollar General reported a third-quarter profit of $235.3 million, or 84 cents a share, which the company said was dented 5 cents by a charge for store relocation costs. In the year-ago period, the company earned $253.3 million, or 86 cents a share. Analysts polled by Thomson Reuters expected 93 cents a share.
Revenue rose 5% to $5.32 billion though analysts had hoped for $5.37 billion.
The company also said it expects per-share earnings in 2016 to grow at the low end of its long-term range of 10% to 15%.
