Dollar Stores Post Q2 Miss, Shares Fall

Dollar General Corporation DG and Dollar Tree, Inc. DLTR reported earnings and revenue miss for the second quarter. Both companies' EPS missed by a penny. As a result, shares of both the companies are hammered in pre-market trading.

Dollar General traded down by $7.68, or 8.37 percent, to $84.11; Dollar Tree dropped $5.83, or 6.14 percent, to $89.10.

Dollar General

Dollar General said net income was $307 million, or $1.08 per share, in the second quarter, up from $282 million, or $0.95 per share, in the previous year period. Street analysts expected an EPS of $1.09.

Net sales grew 5.8 percent from $5.1 billion to $5.39 billion and came below analysts' predictions of $5.5 billion. Same-store sales advanced 0.7 percent fueled by an increase in average transaction amount, which was offset by traffic drop.

Dollar General continues to expect EPS within a range of 10 to 15 percent for the current fiscal year. CEO Todd Vasos said, "Looking ahead, we remain focused on our long-term strategy to invest for growth while also returning cash to shareholders through consistent share repurchases and anticipated quarterly dividends."

Dollar Tree

Dollar Tree reported net income of $170.2 million, or $0.72 a share, compared to a net loss of $98.0 million, or a loss of $0.46 a share, in the year-ago period. This fell shy of estimates by a penny.

The discount retailer's net sales jumped 65.9 percent from $3.01 billion to $5.0 billion and missed analysts' predictions of $5.09 billion. Its same store sales grew 1.2 percent on a constant currency basis.

CEO Bob Sasser said, "Just over a year ago, we completed our acquisition of Family Dollar and our integration continues to progress as planned. The stores are cleaner, the values are greater and our merchandise assortments are improving. Additionally, we are taking the necessary steps to develop our shared services support model, and are continuing our focus on cost-related synergy capture."

Going forward, the company expects EPS to be $0.76-$0.82 for the third quarter on $5.02-$5.06 billion revenue. Street is looking for an EPS of $0.76 on revenue of $5.13 billion.

Similarly, for the full year, the retailer expects EPS to be $3.67-$3.82 on revenue of $20.69-$20.87 billion, down from its previous range of $20.79 - $21.08 billion. Analysts' estimates $3.79 a share on revenue of $20.97 billion.