Dollar General has been investing significantly to improve
its assortment and consumer convenience as well as in its technological
capabilities. Last quarter, the company introduced two new initiatives DG Fresh
and Fast Track, and updates on their progress will be worth watching.
These investments can prove lucrative over the longer term
but in the short term, they are likely to result in higher expenses and weigh on
profitability. The ongoing trade tensions between the US and China and the
resultant tariffs might also negatively impact the company.
In the fourth quarter of 2018, Dollar General missed earnings expectations while sales matched projections. Net sales grew 8.5% to $6.6 billion while adjusted EPS rose 24% to $1.84. Same-store sales increased 4%, helped by growth in average transaction and customer traffic.
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.
Dollar General’s stock has gained over 13% so far this year. Over the past 52 weeks, the stock has climbed over 26%.