Variety stores chain, Dollar General Corp. (NYSE: DG) plummeted in pre-market trading as the retailer’s Q2 earnings declined by 28.5% to $2.13 per share and fell short of Street estimates of $2.47 per share. The company’s net sales went up by 3.9% to $9.8 billion but missed analysts’ estimates of $9.93 billion.
Dollar General’s same-store sales declined by 0.1% in the second quarter. The company’s Board of Directors has declared a quarterly cash dividend of $0.59 per share on its common stock, payable on or before October 24 to shareholders of record on October 10, 2023.
More disappointingly, the company lowered its FY23 outlook and anticipates net sales to grow in the range of 1.3% to 3.3% as compared to its prior expectation of between 3.5% and 5%. same-store sales are forecasted to increase or decrease by 1%. Furthermore, Dollar General anticipates earnings to decline in the range of 34% to 22%, to fall between $7.10 and $8.30. This decline is likely to be due to higher interest expenses and “lapping the fiscal 2022 53rd week.”
The company added in its press release that it expects “an incremental operating profit headwind of up to $170 million in the second half of 2023” as it makes strategic investments in targeted areas like retail labor to reduce its inventory.
Analysts are cautiously optimistic about DG stock with a Moderate Buy consensus rating based on 10 Buys and Holds each and one Sell.
