Dollar General Corp. DG released its second-quarter 2020 earnings results before the opening bell on Aug. 27. Both earnings and revenue surpassed Wall Street's expectations. The company attributed its strong results to positive contributions from the new stores, coupled with robust comps growth.
By the numbers
The Goodlettsville, Tennessee-based discount store chain posted earnings per share of $3.12, which exceeded EPS of $1.65 reported in the year-ago period. Revenue of $8.68 billion surged 24.4% on a year-over-year basis. Analysts had anticipated earnings of $2.44 per share on $8.33 billion in revenue.
SG&A expenses fell to 20.4% of sales compared to 22.5% of sales in the year-ago quarter as the coronavirus-related costs were more than offset by an increase in net sales.
Operating profit came in at $1 billion, which reflected a growth of 80.5% on a year-over-year basis.
Strong comps
Comparable store sales improved 18.8% in the reported quarter due to growth in the average transaction amount, which was partially offset by a decline in customer traffic. In addition, strong performance in the Consumables, Seasonal, Apparel and Home categories favorably impacted the metric. CEO Todd Vasos had the following to say:
"We continue to operate from a position of strength and are excited to announce the acceleration of several key strategic initiatives, including the rollout of DG Pickup, DG Fresh, and our Non-Consumables initiative, as well as an increase in our expected number of real estate projects for fiscal 2020. Our robust portfolio of initiatives, coupled with our expansive real estate footprint of nearly 17,000 store locations, positions us well to continue delivering value and convenience for our customers, while driving sustainable long-term growth and value for our shareholders."
Store count
The company launched 500 new outlets, modernized 973 stores and repositioned 43 stores during the first two quarters. It looks forward to opening approximately 1,000 new stores, remodelling 1,670 stores and repositioning 110 stores in fiscal 2020.
Financials and dividend payment
The discount retailer had cash and cash equivalents of $2.1 billion at the quarter's end.
The company bought back 3.2 million shares for $602 million during the second quarter of 2020. The average price spent per share was $188.94.
The Board of Directors of the company announced the next cash dividend of 36 cents per share, which will be payable to shareholders on or before Oct. 20.
Guidance
Dollar General pulled its financial forecast for fiscal 2020. However, the company did estimate that capital spending would fall within the range of $1 billion to $1.1 billion.
Disclosure: I do not hold any positions in the stocks mentioned.
Read more here:
- Highlights from Dollar Tree's 2nd-Quarter Results
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