Dollar General tops quarterly results as more shoppers turn to its stores
By Granth Vanaik
(Reuters) -Dollar General posted a smaller-than-expected drop in quarterly sales and beat profit estimates on Thursday, as more shoppers turned to its stores for cheaper groceries and other essentials amid sticky inflation pinching household budgets.
Shares of the company, down 45% so far this year, were up more than 4% in premarket trading after it also reaffirmed its full-year sales and profit forecasts.
Dollar General (NYSE:DG), which in October re-appointed former CEO Todd Vasos for a second stint, in a move to stabilize its struggling business, has already trimmed its annual sales and profit forecasts for a third time this year.
After several earnings misses and lowered forecasts, Dollar General reiterating its outlook suggests that the company is finally reaching a bottom for earnings for 2023, Truist Securities analyst Scot Ciccarelli wrote in a note.
Discount store operators in recent quarters have been struggling with a shift in shopper preferences for essentials over general merchandise, while they face a stiff competition from larger retailers such as Walmart (NYSE:WMT).
To counter this, Dollar General has been taking measures to keep prices low on everyday staples as well as offering discounts and promotions to clear excess stock.
Last week, rival Dollar Tree (NASDAQ:DLTR) trimmed its annual sales forecast on weaker spending from lower-income households.
Dollar General's total merchandise inventories in the third quarter declined 1.8% year-on-year. But gross margins fell 147 basis points, as it grappled with a rise in retail shrink, where inventory is either lost, damaged or stolen.
Same-store sales fell 1.3% for the quarter, compared with LSEG estimates of a 2.08% drop.
It posted a per-share
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