Market Overview

Dollar Store Stocks Fall After Dollar General Earnings

Shares of dollar store stocks are getting hit hard on Tuesday after Dollar General (NYSE: DG) released its fiscal third-quarter earnings results.

The stock falling the most on the session has been DG competitor Family Dollar (NYSE: FDO). After opening only marginally lower, big sellers have been seen in the name throughout the day. At last check, the stock had fallen almost nine percent to $64.47 after opening the day at just below $70.00.

Dollar General shares were last down around seven percent to $43.26 and Dollar Tree (NASDAQ: DLTR) had lost roughly 4.5 percent and was trading at $37.65. What is clear from the market activity is that Dollar General's earnings report has exacerbated negative segment in the dollar store sector of the market.

In particular, Dollar General and Dollar Tree had been falling prior to Tuesday's session. Over the last three months, DG shares are now down 11.4 percent and DLTR has lost nearly 19 percent. Family Dollar, on the other hand, has risen around two percent over the last three months. Tuesday's losses in FDO, however, could be the start of a down trend in that stock as well.

Dollar General reported earnings that topped analysts' expectations for the third quarter and revenue which was in-line with estimates.

The results, however, were clearly below the expectations of large investors. The company also provided updated guidance and offered generally cautious commentary on its forward looking outlook.

Dollar General's CEO Rick Dreiling said that "Although our performance over the Thanksgiving weekend and start of the holiday season has been encouraging, we continue to be cautious for the remainder of the year.''

''We are facing a significant same-store sales comparison from our 2011 fourth quarter, which included very strong January sales, growing near-term pressures that are impacting our customers' confidence and spending, and a challenging competitive environment,'' Dreiling added.

For the third-quarter, Dollar General reported adjusted net income of $209.5 million or $0.63 per share. This beat consensus Wall Street earnings estimates of $0.60 by three cents.

Sales in the period were up 10.3 percent to $3.96 billion versus $3.6 billion in the year ago period. This was in line with analysts' consensus expectations.

Same-store sales at Dollar General rose 4.0 percent. Gross margin was 30.9 percent compared to 31 percent last year. For the fourth quarter, the company said that it expects comparable store sales to rise three to four percent.

For the full-year, Dollar General said that it now expects EPS to be between $2.82 and $2.85, above its previous EPS guidance of $2.77 to $2.85. Total sales in the fiscal year are now expected to rise 8 to 8.5 percent versus the company's prior guidance of a rise of 8 to 9 percent. Currently, Wall Street analysts have full-year EPS estimates of $2.86 on revenue of $16.12 billion.

Posted-In: Earnings News Guidance Intraday Update Movers Best of Benzinga

 

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