Dollar General Corp. Rises After Earnings Beat

Dollar General released its latest earnings report before opening bell this morning, posting earnings of $1.03 per share, which represents a 23% year over year increase, on $5.27 billion in sales, representing a 7% increase from last year. Analysts had been expecting earnings of 95 cents per share on $4.28 billion in revenue. In last year’s first quarter, the discount retailer reported earnings of 84 cents per share on $4.92 billion in sales.

Dollar Genera’s comparable store sales miss consensus

Dollar General said comparable store sales increased 2.2%, which came up short of the consensus of a 2.4% increase. The retail chain said increases in customer traffic and average transaction size drove the increase in same store sales. Also positive results in consumables and some non-consumables categories drove the increase in same store sales. It added that consumables sales outpaced non-consumables sales. The seasonal and home subcategories within non-consumables drove sales in that category. Dollar General also said sales by new stores positively impact the increase in net sales, although sales from closed stores partially offset this increase.

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The retail chain’s gross profit as a percentage of sales edged higher from 30.5% in the year-ago quarter to 30.6% this year, representing a 16 basis point increase. Dollar General said most of that increase came from an increase in initial markups on inventory and a decline in transportation costs, which was partially due to lower fuel prices. A higher proportion of consumables sales partially offset these savings as they have a lower gross profit rate than non-consumables. Also an increase in markdowns and higher shrinkage of inventory negatively impacted gross profit margin.

Dollar General returns capital to shareholders

During the first quarter, Dollar General bought back 2.7 million common shares at an average of $84.81 per share. Between December 2011 and the end of this year’s first quarter, the retail chain has bought back $3.8 billion worth of its shares as part of its share repurchase authorization. It will pay out its regular quarterly dividend of 25 cents per share on June 29 to shareholders of record on June 15.

Dollar General shares surged in premarket trading this morning, climbing by as much as 4.23% to $87.70.