Dollar General Rallies After Earnings Report

Discount retailer Dollar General DG reported profits on Wednesday that beat expectations. As a result, the company announced that it would be raising its full-year earnings forecast. Second-quarter same-store sales increased 5.1 percent, while total sales improved 10.4 percent. Adjusted operating profit increased 10.9 percent, and reported operating profit increased 10.6 percent. Adjusted net income increased 27 percent, while adjusted EPS increased 33 percent to $0.69. Reported net income increased 47 percent and reported EPS increased 52 percent to $0.64. "Dollar General had another strong quarter," said Rick Dreiling, chairman and chief executive officer. "Our same-store sales increase of 5.1 percent demonstrates the ongoing execution of the initiatives around our key operating priorities and is evidence of our continued importance to our customers. We are pleased with the start of our third quarter and have refined our expectation for full year same-store sales growth to 4 to 5 percent, an increase from our previous expectation of 3 to 5 percent." Dreiling also said that Dollar General would be raising its full-year adjusted earnings per share guidance to a range of $2.77 to $2.85, including a $0.04 per share benefit from the settlement of an income tax audit in the second quarter. These lean economic times seem to be driving consumers to discount retailers, with Dollar Tree DLTR announcing in August that its earnings had increased 26 percent -- more than analysts expected. Dollar General has 10,200 stores in 40 states, and the Dreiling said that the profit increase can largely be put down to an expansion in the ranges of snacks, candy and perishable food available. “Sales growth was also strong in the Company's home and seasonal categories, as well as certain departments in apparel, including accessories, sleepwear and intimates,” he said. So for 2012, Dollar General is now expecting to generate adjusted profit of $2.77 to $2.85 per share. That included a tax settlement of 4 cents per share. Previously, it had forecast $2.68 to $2.78 per share. Meanwhile, the analysts had expected adjusted earnings of $2.81 per share. On Wednesday afternoon, Dollar General traded at about $51.50, up roughly 1.75 percent.