Month to date through Tuesday, same-store sales climbed 15% year over year.
Brian Killian/Getty Images for Procter & GambleDollar General stock was trending higher Thursday morning, following the discounter’s better-than-expected second-quarter earnings, which showed that shoppers continued to flock to its expanding network of stores.
Dollar General (ticker: DG) said it earned $787.6 million, or $3.12 a share, up from $1.65 a share a year earlier, on revenue that rose 24.4% to $8.68 billion. Analysts were looking for EPS of $2.47 and revenue of $8.4 billion.
Comparable sales climbed 18.8% in the quarter, and while customer traffic was lower, average transaction size rose—echoing patterns seen at other retailers, as consumers limit their trips to stores and stock up when they do go out. Dollar General said demand was strong across categories, including apparel and home goods.
There was a lot to like about the quarter. The company resumed share repurchases to the tune of $602 million, and the board of directors added $2 billion to the buyback program. It plans to complete $2.5 billion in share repurchases by the end of its fiscal year in January.
In addition, while other retailers are shutting underperforming locations, Dollar General continues to expand. It had 16,720 stores open at the end of July, up from 15,836 open as of Aug. 2, 2019.
The company’s increasing store base was one of the reasons Barron’s recommended the stock last month, along with its robust growth outlook as unemployment and economic uncertainty rises amid the Covid-19 crisis.
The company said it continues to see robust demand in the fiscal third quarter, which began Aug. 1. Month to date through Tuesday, same-store sales climbed 15% year over year, however the company didn’t provide full-year guidance, citing the pandemic.
Dollar General shares were up 1.1% to $206.24 in premarket trading, as Dow Jones Industrial Average futures slipped 0.1%.
Write to Teresa Rivas at teresa.rivas@barrons.com
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August 27, 2020 at 07:55PM
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Dollar General Stock Is Rising on the Strength of Earnings and Buybacks - Barron's
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