Dollar General profit squeezed by falling margins but backs outlook
Published: 07:21 07 Dec 2023 EST
Dollar General Corporation saw net income plunge in the third quarter as same store sales and margins were hit by increased shrinkage and higher mark downs.
Nonetheless, shares in the Goodlettsville, Tennessee discount retailer rose 3.5% in pre-market trading as it reiterated its full-year guidance.
In the third quarter ended November 3, the company said net sales increased 2.4% to $9.7 billion while like-for-like sales decreased 1.3%.
The drop in same store sales was driven by a decline in average transaction amount with falls in each of the home, seasonal, apparel, and consumable categories.
Gross profit margin slipped to 29.0% in the third quarter of 2023 compared to 30.5% the year before reflecting increased shrinkage, lower inventory markups, and increased markdowns.
Net income slumped 48% to $276.2 million from $526.2 million the year prior while diluted EPS decreased 45.9% to $1.26.
“While we are not satisfied with our financial results for the third quarter, including a significant headwind from inventory shrink, we are pleased with the momentum in some of the underlying sales trends, including positive customer traffic, as well as market share gains in both dollars and units,” said Todd Vasos chief executive officer.
Vasos said the firm has identified key opportunities for improvement both in the near term and over the longer term but gave no further details.
Looking ahead, Dollar General forecast net sales growth in the range of 1.5% to 2.5% with diluted EPS in the range of $7.10 to $7.60, or a decline of 29% to 34%.
A quarterly dividend of $0.59 per share was declared.
