Discount retailer Dollar General Corp. (DG) Tuesday reported a nearly 64% growth in first quarter profit, helped primarily by improved customer traffic and higher gross margins. The group also raised its adjusted earnings guidance and reaffirmed its sales outlook for the full year 2010.
For the first quarter, the Goodlettsville, Tennessee-based company's net earnings totaled $136 million or $0.39 per share, higher than $83.01 million or $0.26 per share in the prior-year period. On an adjusted basis, net profit soared 75.2% to $145.4 million or $0.42 per share from $83.0 million or $0.26 per share a year earlier.
Adjusted results for the quarter exclude items totaling about $15 million with regard to a secondary offering of the group's common stock by certain existing shareholders during the 2010 first quarter.
On average, 14 analysts polled by Thomson Reuters expected Dollar General to earn $0.34 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the three-month period increased 11.9% to $3.11 billion from $2.78 billion in the first quarter a year ago. Analysts expected the retailer to generate revenues of $3.03 billion for the quarter.
In the preceding fourth quarter, the company recorded net earnings of $87.2 million or $0.26 per share on net sales of $3.19 billion.
Same-store sales for the quarter grew 6.7% as compared with a 13.3% increase in the year-ago quarter, with customer traffic and average transaction amount contributing to the same-store sales increases in both periods.
Commenting on the results, Chairman and Chief Executive Officer Rick Dreiling said, "Our first quarter sales were ahead of our expectations. Our same-store sales growth of 6.7 percent for the quarter was on top of 13.3 percent growth in the first quarter of 2009." According to Dollar General, sales were strongest in consumables and seasonal categories.
By category, sales from consumables rose to $2.23 billion from $2 billion in 2009. Seasonal sales were $430.05 million, up 20.6% from $356.45 million a year ago. Sales for the quarter from home products totaled $224.87 million, higher than prior year's $216.88 million. Quarterly apparel sales were up at $224.90 million, compared to $210.79 million a year ago.
Gross margins for the first quarter rose 136 basis points to 32.1% from 30.8% in the last-year quarter, primarily reflecting higher net markups, partially offset by increased markdowns.
Dollar General noted that higher markups were impacted by increased sales volumes and improved global sourcing capabilities which contributed to the group's ability to reduce product costs. Increased markups were also impacted by an increase in mix of private brands. Higher markdowns in the quarter were attributable partially to the acceleration of certain planogram resets compared to the previous year.
During the three-month period, selling, general and administrative costs were $709.03 million versus $630.49 million in the previous year.
Based on its first quarter results and looking ahead to fiscal 2010, the retailer currently estimates adjusted net earnings to be between $1.62 and $1.69 per share, up from its earlier outlook of between $1.55 and $1.63 per share. Adjusted results for 2010 exclude costs with regard to common stock offerings that have occurred in the relevant periods and early retirement of long-term obligations, as applicable.
Dollar General said it continues to expect total sales for the year to grow by 8% to 10%, including a 4% to 6% rise in same-store sales. Wall Street analysts presently expect the company to report earnings of $1.63 per share on revenues of $12.95 billion for the year 2010.
In the year 2010, Dollar General intends to open nearly 600 new stores and remodel or relocate a total of approximately 500 stores.
Among peers, Dollar Tree Inc. (DLTR) on May 20 reported higher profit for the first quarter, helped by growth in sales that reflected increases in traffic and average ticket. In the first quarter, the Chesapeake, Virginia-based retailer's net income grew to $63.6 million or $0.73 per share from $60.4 million or $0.66 per share last year. Consolidated net sales for the period was $1.35 billion, a 12.6% rise from $1.20 billion in the year-ago quarter.
Another rival, Family Dollar Stores Inc. (FDO) on April 7 reported higher profit for the second quarter, impelled by an increase in customer traffic as well as average customer transaction value. The Matthews, North Carolina-based company's second-quarter net earnings were $112.2 million, up 33.4% from $84.1 million in the prior year. On a per share basis, earnings advanced 35% to $0.81 from $0.60 in the same quarter of previous year. Quarterly net sales rose 4.9% to $2.09 billion from $1.99 billion a year ago.
DG is currently trading on the New York Stock Exchange at $29.85 per share, up $0.62 or 2.12%, on a volume of 830,287 shares. In the past 52-week period, the stock traded in a range of $21.30 to $31.41.
For comments and feedback contact: editorial@rttnews.com
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.