Dollar General's (DG) reports earnings and issues disappointing 2019 profit forecast

NYSE: DG | Dollar General Corporation Common Stock News, Ratings, and Charts

DG – The discounter’s customers spent more on groceries at the discount retailer’s stores, benefiting from an earlier-than-usual issue of food stamps.

Dollar General forecast 2019 profit below analysts’ expectations on Thursday as the discount retailer ramps up spending on stores to pull in more customers, sending its shares down nearly 6 percent.

Dollar General has spent the last year remodeling stores, adding more refrigeration units and shortening queues at payment counters.

 The company said in 2019 it would spend about $50 million to improve distribution of fresh and frozen food, shopping convenience and labor productivity.

The company said it expects fiscal 2019 earnings of $6.30 to $6.50 per share, below the average analyst estimate of $6.65, according to IBES data from Refinitiv.

Excluding items, the company earned $1.84 per share in the fourth quarter ended Feb. 1 but missed the average analyst estimate of $1.88.

However, the company’s fourth-quarter same-store sales rose 4 percent and beat the 2.6 percent increase analysts had estimated, as its customers, who benefited from an earlier-than-usual issue of food stamps, spent more on groceries.

Net sales rose 8.5 percent to $6.65 billion and beat analysts’ expectations of $6.61 billion.

Shares were trading down at $113.98 before the opening bell, despite the company raising its quarterly dividend by 10 percent and increasing its share buyback program by $1 billion.

Dollar General Corp. shares were trading at $109.24 per share on Thursday morning, down $11.44 (-9.48%). Year-to-date, DG has gained 1.34%, versus a 12.62% rise in the benchmark S&P 500 index during the same period.

DG currently has a POWR Rating of A (Strong Buy), and is ranked #3 of 18 stocks in the Grocery/Big Box Retailers category.

This article is brought to you courtesy of CNBC.

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The day of this event (Mar. 14, 2019)
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