Goodlettsville, Tenn. – Although Dollar General’s core lower-income customers continue to spend carefully, the dollar store chain moved the needle on sales during the third quarter.
For the quarter ended Nov. 2, net sales rose 5.0% to $10.2 billion, driven by positive sales contributions from new stores. Growth in same-store sales was partially offset by the impact of store closures.
Comps ticked up 1.3% – near the top end of the retailer’s expectations. Average transaction was up 1.1% and traffic up 0.3%. Consumables drove the gain as Dollar General experienced comp declines in the home, seasonal and apparel categories.
“We believe our Back to Basics efforts contributed to these results, as we have continued to improve our execution and the customer experience in our stores,” said CEO Todd Vasos.
Net income tumbled nearly 29% to $196.5, or $0.89 per diluted share. The results included $32.7 million in hurricane-related costs, primarily due to store inventory and property losses from Hurricanes Helene and Milton in the early fall.
Dollar General today unveiled a robust store plan for next year. It includes opening approximately 575 new stores in the U.S., opening up to 15 new stores in Mexico, fully remodeling approximately 2,000 stores, remodeling approximately 2,250 stores through Project Elevate for “mature” stores, and relocating approximately 45 stores.
The company ended the quarter with 20,523 stores.
Looking ahead, Dollar General pared the upper end of its fiscal year earnings forecast, citing hurricane recovery expenses and the impact to profit from the promotional Q4 environment. The low end of guidance for EPS remains t $5.50, but the upper end has been brought down to $5.90. I was previously $6.20.
The company also trimmed its top-line forecast. It now expects FY net sales growth in the range of 4.8% to 5.1%, compared to its previous expectation of approximately 4.7% to 5.3%. Comp growth is expected to land in the range of approximately 1.1% to 1.4%, compared to its previous expectation in the range of 1.0% to 1.6%.
See also:
- Dollar General seeks to diversify vendor roster
- Dollar General names new VP/DMM for PopShelf concept