Categories Earnings, Retail

Cost optimization helps Dollar General post strong results in Q2

For the second quarter, Dollar General  Corporation (NYSE: DG) said its adjusted earnings rose to $1.74 per share compared to $1.52 per share in the year-over period, fuelled by more disciplined cost control measures as well as category management. The bottom-line was 17 cents higher than the Wall Street projection.

The adjusted earnings included certain legal expenses and after-tax impact.

For the second quarter, Dollar General  Corporation (NYSE: DG) said its adjusted earnings rose to $1.74 per share compared to $1.52 per share in the year-over period

Dollar General and its peer Dollar Tree (NASDAQ: DLTR) were slapped with fines amounting to $1.2 million on Monday for selling expired products. Both chains allegedly sold over-the-counter drugs that were expired, while Dollar General was penalized for selling obsolete motor oil that was not suitable for modern cars. 

Net sales for the second quarter rose 8.4% to $6.98 billion, vs $6.89 billion expected by the street. The top line was boosted by a 4% growth in same-store sales and positive sales contributions from new stores.

Except in the apparel category, same-store sales grew in all other units.

dollar general
Image courtesy: Dollar General

Dollar General has been investing in expanding and remodeling its stores, improving its assortment, as well as in other business growth initiatives.

DG shares rose 6.5% during pre-market trading on Thursday. Dollar General’s shares have gained 29% year-to-date.

READ: JCPenney reports 9% decline in comparable sales in Q2

Outlook

For the fiscal year 2019, Dollar General now expects net sales growth of approx 8%, compared to its previous expectation of 7%.  Growth in same-store sales is currently projected to be in the low-to-mid 3% range, compared to its previous expectation of about 2.5%.

Due to the legal expenses, adjusted EPS for this period is forecast to be $6.45 to $6.60.

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