Dollar General Corp. (DG), one of the largest discount retailers in the U.S., Tuesday reported a sharp increase in profit for the second quarter, driven by sales growth and margin expansion. The dollar store chain also raised its full-year adjusted earnings outlook, while being mindful of the macroeconomic environment, including continuing high unemployment rates.
The company's second-quarter net income rose to $141.20 million or $0.41 per share, from $93.59 million or $0.29 per share in the same quarter last year.
Excluding a net loss $3.9 million relating to the early repayment of certain long-term obligations, adjusted net income for the latest quarter surged 55% to $145.1 million or $0.42 per share.
On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $0.38 per share. Analysts' estimates typically exclude special items.
Second-quarter sales increased 10.8% to $3.21 billion from $2.90 billion in the second quarter of 2009. Fifteen analysts had a consensus revenue estimate of $3.22 billion for the quarter.
Same-store sales - a metric used by retailers to measure performance of stores open for at least one year - rose 5.1% on top of an 8.6% rise a year ago, with customer traffic and average transaction amount contributing to the growth.
In the immediately preceding first quarter, the company earned $0.39 per share and generated revenues of $3.11 billion, with same-store sales rising 6.7%.
Commenting on the second quarter results, Rick Dreiling, Dollar General's chairman and chief executive officer, stated, "The combination of the right strategies, good execution and superior margin performance enabled us to effectively manage through a volatile quarter. During the second quarter, we saw same-store sales accelerate in the last month, and I am encouraged with sales so far in the third quarter."
Gross margin expanded 101 basis points in the second quarter to 32.2% of sales from 31.2% a year ago. The company attributed this improvement to higher net markups, partially offset by increased markdowns and higher transportation costs.
Further, the company said that transportation expenses were higher in the second quarter, reflecting average fuel costs growth. However, the leverage attained from higher sales helped the company to reduce selling, general and administrative costs as a percentage of sales by 32 basis points.
Looking ahead, the company raised its fiscal 2010 adjusted earnings outlook to a range of $1.68 - $1.74 per share, from an already increased prior outlook range of $1.62 - $1.69 per share. The original earnings outlook was between $1.55 and $1.63 per share. Analysts, meanwhile, expect the company to report earnings of $1.72 per share for fiscal 2010.
The company now expects total sales for the year to increase 8.5% to 10.5%, including an increase of 4% to 6% in same-store sales. The earlier guidance range was 8% to 10% sales growth, including a 4% to 6% rise in same-store sales.
Dollar General also said that it plans to open approximately 600 new stores and to remodel or relocate a total of approximately 500 stores in 2010.
"Fiscal 2010 is on track to be another great year for Dollar General, reflecting our disciplined execution and ability to deliver excellent performance and positioning us for continued growth in the future," said Dreiling.
Among peers, Dollar Tree, Inc. (DLTR) recently reported a 37% year-over-year increase in profit for the second quarter, boosted by higher operating margins and sales growth amid better store traffic. The Chesapeake, Virginia-based operator of discount variety stores selling everything for $1 or less also raised its full year adjusted earnings forecast and sales outlook.
DG closed Monday's trading at $27.38 on the NYSE. In the past 52-week period, its shares have traded in a range of $21.30 - 31.41, with three-month average volume of 1.06 million.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.