An 11 percent increase in net sales helped the discount retailer to a profit of $252.5 million in the quarter, topping Wall Street expectations and the $235.3 million it posted in the same quarter last year. Same-store sales - or sales in stores open at least a year, a key indicator of a retailer's health - were up 4.3 percent over last year's quarter.
While much of the retail sector has been closing stores and laying off workers for years, Goodlettsville, Tennessee-based Dollar General has been opening locations and hiring throughout the U.S. Early this year, the company announced it planned to create 10,000 jobs in 2017 with the opening of 1,000 stores and two distribution centers. The company has about 121,000 employees and 14,000 locations in the U.S.
Dollar General has been primarily focused on shoppers seeking the absolute lowest prices, but is now trying to attract middle-income shoppers seeking convenience and brands.
Neil Saunders, an analyst with Global DataRetail, said he is encouraged by the results of the store's strategy. "Optimizing the product assortment, including bringing in more branded products, has allowed Dollar General to shift quality perceptions - especially among non-traditional shoppers," Saunders said. "The move has also helped Dollar General increase average transaction values."
Dollar General earned net income of 93 cents per share. Earnings, adjusted for non-recurring costs, came to 98 cents per share.
The results surpassed Wall Street expectations. The average estimate of 12 analysts surveyed by Zacks Investment Research was for earnings of 94 cents per share.
The company posted revenue of $5.9 billion in the period, which also beat Street forecasts. Six analysts surveyed by Zacks expected $5.8 billion. Dollar General had revenue of $5.3 billion in last year's third quarter.
The company expects full-year earnings to be $4.37 to $4.47 per share. Looking ahead to the next fiscal year, the retailer plans to open about 900 new stores, remodel 1,000 stores and relocate about 100.
Dollar General Corp. shares rose almost 3 percent in morning trading, to $93.27, and have climbed more than 23 percent from the start of the year.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on DG at https://www.zacks.com/ap/DG
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