Earnings preview: How will Q2 turn out for Dollar General?

Dollar General Corporation (NYSE: DG) is slated to report second quarter 2019 earnings results on Thursday, August 29, before the opening bell. Analysts expect the company to report earnings of $1.57 per share on revenue of $6.8 billion.

Dollar General has been investing in expanding and remodeling its stores, improving its assortment, as well as in other business growth initiatives. Healthy trends in average transaction and customer traffic have helped drive growth in same-store sales and this can be expected to continue in the second quarter.

The company’s growth initiatives are likely to help drive increases in sales and profits for the to-be-reported quarter. However, higher costs continue to be a concern as they impact margins. In general, the sentiment around the second quarter results appear to be positive.

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 sold over-the-counter drugs that were expired, while Dollar General was penalized for selling obsolete motor oil that were not suitable for modern cars. This comes as a huge hit to the company and updates on this are something to keep an eye out for. 

Also see: Dollar General Q1 2019 Earnings Report

In the first quarter of 2019, Dollar General exceeded sales and earnings estimates with an 8% increase in net sales to $6.6 billion and a 9% increase in EPS to $1.48. Same-store sales increased 3.8%.

For the full year of 2019, Dollar General has guided for sales growth of 7% and a 2.5% increase in same-store sales. The EPS forecast is in the range of $6.30-6.50.  

Dollar General’s shares have gained 29% year-to-date. The stock was up 1.3% in midday trade on Monday.

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