Dollar General grew its net sales in the second quarter, although comps were sluggish, a trend also reflected in results for Dollar Tree and Big Lots.
In the second quarter ended July 29, Dollar General Corp. recorded net income of $306.5 million, or $1.08 per diluted share, versus $282.3 million, or 95 cents per diluted share, in the 2015 period. Earnings per diluted share narrowly missed an analyst average estimate of $1.09 published by MarketBeat.
Comparable store sales increased 0.7%, driven primarily by an increase in average transaction amount partially offset by a decline in traffic. Among categories, consumables helped to boost comps, while seasonal came in flat and apparel and home saw declines versus the 2015 quarter.
Net sales in the quarter were up 5.8% year over year to $5.39 billion. In addition to the comp gain, net sales got a boost from new store revenues modestly offset by sales from closed stores.
“We are pleased with our 2016 second quarter diluted earnings per share growth of 14% over the 2015 second quarter, although our same-store sales performance fell short of our expectations,” said Todd Vasos, Dollar General CEO. “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.”
In the year’s second half, he said, “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.”
Dollar General operates 13,000 stores in 43 states, and recently announced plans to expand into North Dakota.
