No Amazon pain at Dollar General
Dollar General's investments in its employee force bore fruit in the form of comp increases in the second quarter, but the same labor expenses also cut into profits.
Dollar General's net income fell to $294.8 million from $306.5 million, as it spent more on wages and training for store managers. On a per share basis, net income was flat at $1.08 per share as the company had fewer shares outstanding. Same store sales rose 2.6 percent in the second quarter ended Aug. 4.
"I am pleased with our results at this point in the year. For the quarter, same-store sales grew 2.6%, driven by an increase in our average transaction amount and, importantly, positive customer traffic. In a dynamic retail and consumer landscape, we continue to make targeted investments in our business to execute on our focused strategic and operating initiatives which we believe will contribute to sustainable improvement over time," said Todd Vasos, Dollar General's chief executive officer.
Dollar stores and their popularity with lower-income customers have helped Dollar General and others beat back the threat of Amazon and sustain revenue growth at a time when big retailers are slashing prices and struggling to compete.
Net sales at Dollar General climbed 8 percent to $5.83 billion. The company lifted the lower end of its profit forecast range for the year ending January. It now expects earnings of $4.35 to $4.50 per share, compared with a previous forecast of $4.25 to $4.50.
Dollar General also said it now expects full-year comparable sales at the high end of its forecast of up to 2 percent growth.
Dollar General operated 14,000 stores in 44 states as of Aug. 19.