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Retailers Dollar General, Big Lots Report Weak Results; Stock Down

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Retailers Dollar General Corp. (DG) and Big Lots, Inc. (BIG) reported Thursday results for the third quarter, with profit at Dollar General increasing from last year, while Big Lots reported a sharply wider loss than last year. The bottom line at both the retailers missed analysts' estimates.

In pre-market trading on the NYSE, Dollar General shares are slipping $14.68 or 5.74 percent to trade at $241.00, and, Big Lots shares are plunging $1.95 or 10.00 percent to trade at $17.55.

Variety stores chain Dollar General reported net income of $526.17 million or $2.33 per share, up from $487.03 million or $2.08 per share in the prior-quarter.

On average, 21 analysts polled by Thomson Reuters expected the company to report earnings of $2.53 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter grew 11.1 percent to $9.46 billion from $8.52 billion in the same quarter last year. Analysts expected net sales of $9.43 billion for the quarter.

Same-store sales increased 6.8 percent, driven primarily by an increase in average transaction amount, as well as a modest increase in customer traffic.

The company said net sales increase was primarily driven by positive sales contributions from new stores and growth in same-store sales, partially offset by the impact of store closures.

"Despite the cost pressures we experienced during the quarter, as well as challenges within our internal supply chain resulting in higher-than-anticipated distribution and transportation costs, our team was resilient and worked hard to deliver double-digit diluted EPS growth," said Jeff Owen, Dollar General's CEO.

Consumables sales increased 14.3 percent to $7.66 billion, Seasonal sales were up 3.2 percent to $942.83 million and Home products sales grew 4.2 percent to $574.43 million, while Apparel sales declined 18.8 percent to $282.83 million from last year.

Looking ahead to the fourth quarter, the company expects earnings in a range of $3.15 to $3.30 per share on same-store sales growth in the 6 to 7 percent range.

For fiscal 2022, the company now projects earnings per share growth of about 7 to 8 percent on net sales growth of about 11 percent, with same-store sales growth in the 4.0 to 4.5 percent range.

Previously, the company expected earnings per share growth of about 12 to 14 percent on net sales growth of about 11 percent, with same-store sales growth in the 4.0 to 4.5 percent range.

The company also now plans to execute approximately 2,945 real estate projects, compared to its previous expectation in the range of 2,930 to 2,980 projects, including 1,025 new store openings, compared to its previous expectation in the range of 1,010 to 1,060 new store openings.

For fiscal 2023, the company plans to execute approximately 3,170 real estate projects in the U.S. in fiscal year 2023, including approximately 1,050 new store openings, 2,000 remodels, and 120 store relocations.

On Wednesday, Dollar General's Board of Directors declared a quarterly cash dividend of $0.55 per share on the Company's common stock, payable on or before January 17, 2023 to shareholders of record on January 3, 2023.

Meanwhile, home discount retailer Big Lots reported a net loss for the third quarter of $103.01 million or $3.56 per share, sharply wider than $4.33 million or $0.14 per share in the prior-year quarter. Excluding items, adjusted loss for the quarter were $2.99 per share.

Net sales for the quarter declined 9.8 percent to $1.20 billion from $1.34 billion in the same quarter last year, driven by a comparable sales decrease of 11.7 percent.

On average, analysts polled by Thomson Reuters expected the company to report a loss of $2.94 per share on revenues of $1.21 billion for the quarter. Analysts' estimates typically exclude special items.

Gross margin contracted 490 basis points to 34.0 percent and selling and administrative expenses expanded 530 basis points to 41.8 percent from last year.

Looking ahead to the fourth quarter, the company expects low double-digit decline in comparable sales.

On Tuesday, Big Lots' Board of Directors declared a quarterly cash dividend of $0.30 per common share for the fourth quarter of fiscal 2022, payable on December 28, 2022, to shareholders of record as of the close of business on December 14, 2022.

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