Dollar General Corporation (NYSE: DG) reported a 24.3% increase in fourth-quarter earnings to $1.84 per share but missed the street expectation of $1.88 per share. Net sales improved 8.5% to $6.6 billion, in line with analysts’ projection.
DG shares fell 7% during pre-market trading on Thursday. The stock has seen a steady 35% increase in the trailing 12 months, helped by relatively strong comps growth.
Same-store sales grew 4%, helped by higher average transaction amount and customer traffic.
In Q4, Dollar General closed an incremental 35 stores resulting in about $28.3 million of related pre-tax costs, most of which were in the form of SG&A expenses.
CEO Todd Vasos said, “Looking ahead to 2019, we are excited to introduce two new transformational strategic initiatives, DG Fresh and Fast Track. DG Fresh, which is designed to enable self-distribution of fresh and frozen products, is already up and running in approximately 300 stores and Fast Track, which we believe will enhance in-store labor productivity and customer convenience, is launching soon.”
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For fiscal 2019, the retailer expects net sales growth of about 7%, on a 2.5% growth in same-store sales. Diluted EPS for this period is projected in the range of $6.30 to $6.50.
Of late, the company’s margins have come under pressure due to increased SG&A expenses, mostly due to higher wages, rental costs, and utility expenses. Apart from this, the discount retailer is facing intense competition from other retailers like Walmart (WMT), Dollar Tree (DLTR) etc. on the pricing front.