Categories Analysis, Retail

Dollar General (DG): A few points to note ahead of the Q4 earnings report

Dollar General now expects EPS to range between $2.91-2.96 in Q4

Shares of Dollar General Corporation (NYSE: DG) were down slightly on Wednesday. The stock has dropped 11% year-to-date. The discount retailer is scheduled to report its fourth quarter 2022 earnings results on Thursday, March 16 and it had provided certain preliminary results last month. Here are a few points to note ahead of the upcoming report:

Revenue

Analysts are projecting revenue of $10.24 billion for Dollar General in Q4 2022, which would reflect an increase of 18% from the prior-year period. In the third quarter of 2022, net sales increased 11% to $9.5 billion, driven by positive sales contributions from new stores and growth in same-store sales.

Dollar-General-Q3-2022-Earnings-Infographic

Same-store sales

In February, Dollar General stated that despite continued market share gains in sales of both consumable and non-consumable products, same-store sales for Q4 increased only 5.7% versus the company’s expectation of approx. 6-7% growth.

The company believes that the lower-than-expected results were mainly due to lower-than-anticipated sales and higher-than-anticipated inventory damages, both of which were impacted by Winter Storm Elliott in Q4. Although same-store sales of 6.7% and 6.5% for November and January respectively, came within the expected guidance range for Q4, December’s same-store sales fell short at 4.5% believed to be mainly due to the storm.

Earnings

Dollar General now expects EPS to range between $2.91-2.96 in Q4 compared to its previous expectation of $3.15-3.30. This compares to EPS of $2.57 reported in Q4 2021. In Q3 2022, EPS increased 12% year-over-year to $2.33.

Prelim FY2023 guidance

For fiscal year 2023, Dollar General currently expects same-store sales growth of 3-3.5% and EPS growth of 4-6%.

Competition

Last week, DG’s competitor Dollar Tree (NASDAQ: DLTR) reported its fourth quarter 2022 earnings results, which surpassed expectations. Its net sales rose 9% to $7.7 billion while same-store sales grew 7.4%. EPS increased 1.5% to $2.04.

Also read: Dollar Tree (DLTR): A look at the discount retailer’s expectations for the near term

Looking for more insights on the earnings results? Click here to access the full transcripts of the latest earnings conference calls!

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