Dollar General Shares Fall 9% on Ugly Earnings & Forecast Miss

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August 25, 2016 8:52am NYSE:DG

Discount retailer Dollar General Corp. (NYSE:DG) this morning posted a much weaker-than-expected Q2 earnings report, as profit, revenue, and guidance all fell short of expectations.


Investors sold off the stock in droves before the market open, to the tune of a 9% loss.

The Goodlettsville, TN-based company reported Q2 net income of $1.08 per share barely missing Wall Street’s view of $1.09. Revenue rose 5.7% from last year to $5.39 billion, also missing analysts’ view of $5.5 billion.

Looking ahead, DG confirmed its previously-announced full-year 2017 outlook for EPS ranging from $3.88 to $3.93. That would badly miss the analyst consensus view of $4.65 per share for the year.

The company’s board of directors also authorized an additional $1.0 billion for share repurchases, increasing the total authorization to around $1.4 billion.

From the press release:

“We are pleased with our 2016 second quarter diluted earnings per share growth of 14 percent over the 2015 second quarter, although our same-store sales performance fell short of our expectations. Retail food deflation and a reduction in both SNAP participation rates and benefit levels, coupled with unseasonably mild spring weather, proved to be stronger than expected headwinds to our business. The competitive environment also intensified in select regions of the country. Importantly, even amidst a challenging sales environment, we effectively managed our gross profit margin and leveraged our selling, general and administrative expense as a percent of sales,” said Todd Vasos, Dollar General’s chief executive officer.

“For the second half of the year, we have action plans across both merchandising and store operations intended to drive same-store sales while maintaining strict expense control discipline. Looking ahead, we remain focused on our long-term strategy to invest for growth while also returning cash to shareholders through consistent share repurchases and anticipated quarterly dividends.”

DG-2016-08-25

Dollar General shares plummeted $8.09 (-8.81%) to $83.70 in premarket trading Thursday. Prior to today’s report, DG had gained nearly 28% year-to-date.


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