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Dollar General (NYSE:DG) reported earnings premarket Thursday, topping analyst expectations.
The company posted a profit of $2.98, above the analyst estimate of $2.94, while revenue came in at $9.4 billion versus the consensus estimate of $9.39 billion. Same-store sales increased 4.6%.
The company raised guidance for the year ending February 3, 2023. The discount store now sees net sales growth of around 11%, compared to the previous expectation of between 10% and 10.5%, while same-store sales growth is seen between 4% and 4.5% compared to the 3% to 3.5% previously forecasted.
Following the report, a Telsey Advisory Group analyst said in a note to clients that Dollar General’s EPS was above their estimate of $2.93 and the FactSet consensus (FS) of $2.94, driven by better-than-anticipated sales and profitability, reflecting the impact of inflation and consumers continuing to increase reliance on Dollar General in a challenging economic environment.
“Like most retailers, Dollar General is facing pressures from lapping the US government stimulus and elevated costs. That said, we expect the business to improve as the year progresses, as consumers continue to increase reliance on Dollar General in this more challenging economic environment,” said the analyst, who has an Outperform rating and $280 price target on Dollar general shares.
“Recall, Dollar General generated same-store sales of 9.0% in 2008, 9.5% in 2009, 4.9% in 2010, and 6.0% in 2011. We continue to expect Dollar General’s solid performance to be driven by new stores and remodels and a number of initiatives, including the expansion of cooler doors, DG Fresh supply chain upgrades, Fast Track inventory/labor management, and the expansion of non-consumables initiatives,” he added.
