Dollar General Corp. (DG, Financial) released its fourth-quarter results before the opening bell on Thursday. The results beat Wall Street’s expectations for for both earnings and revenue. The company attributed its strong growth to a rise in the store count coupled with robust comps growth.
Key metrics
The Goodslettsville, Tennessee based discount store chain posted earnings of $2.10 per share, which exceeded the $1.84 per share reported in the year-ago period. Revenue of $7.16 billion surged 7.6% on a year-over-year basis. Analysts had anticipated earnings of $2.01 per share on $7.15 billion in revenue.
Strong comps
Comparable store sales improved 3.2% in the reported quarter. Growth in the average transaction amount and customer traffic drove the increase. In addition, strong performance in the Consumables, Seasonal, Apparel and Home categories favorably impacted the metrics. CEO Todd Vasos had the following to say:
“During the fourth quarter, we delivered a healthy 3.2% increase in same-store sales, as well as strong margin performance. In addition, we executed well across many fronts, including our operating priorities and strategic initiatives. Our value-and-convenience proposition continues to resonate with both new and existing customers, and our unique real estate footprint remains a competitive advantage. As we enter 2020 from a position of strength, we will continue to keep our core customer at the center of all we do, while remaining steadfast in our efforts to deliver long-term shareholder value.”
Segment details
The consumables category saw sales growth of 8.4% in the second quarter to $5.47 billion. The seasonal category experienced a sales increase of 4.3% to $917 million. Home products sales jumped 5.9% to $460.2 million, while apparel sales climbed 6.3% to $308.9 million.
Store details
For the fiscal year 2019, the company launched 975 new outlets, modernized 1024 stores and repositioned 100 stores. It looks forward to opening approximately 1000 new stores, remodeling 1,500 stores and repositioning 80 stores in fiscal 2020.
Guidance
The discount retailer has provided fiscal year 2020 guidance. The company projects earnings per share to grow 10% as compared to 2019’s adjusted full-year EPS of $6.73. Net sales growth is anticipated to fall within the range of 7.5% to 8%, while comps are expected to grow 2.5% to 3%.
Disclosure: I do not hold any positions in the stocks mentioned.
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