Dollar General posts upbeat first quarter on demand for pocket-friendly groceries

By Thomson Reuters May 30, 2024 | 6:07 AM

(Reuters) -Dollar General beat estimates for first-quarter same-store sales and profit on Thursday, as more Americans flocked to its stores for pocket-friendly groceries and essentials at a time when sticky inflation continues to pressure household budgets.

Shares of the Goodlettsville, Tennessee-based company jumped over 5% before the bell.

Dollar General has been focusing on selling relevant merchandise, having more employees at stores and expanding private-label brands, as it looks to attract consumers in the face of rising competition from rivals Walmart, Target and Chinese e-commerce platform Temu.

“These results were driven by strong customer traffic growth and market share gains during the quarter,” said CEO Todd Vasos.

Visits to Dollar General were up 12.6% year-over-year in the first quarter, while rival Dollar Tree saw a 12.4% rise, according to data analytics firm Placer.ai.

Robust quarterly results from bellwether Walmart earlier in May have indicated that U.S. shoppers are still resilient, even as rival Target cautioned about shoppers delaying purchases and spending increasingly on out-of-home activities.

Dollar General’s same-store sales rose 2.4% for the quarter, compared with analysts’ average estimate of a 1.61% increase, according to LSEG data.

The discount retailer posted per-share profit of $1.65, compared with analysts’ expectation of $1.57.

Its gross profit as a percentage of net sales, however, came in at 30.2%, down from 31.6% a year earlier, as it resorted to higher markdowns and saw an increase in retail shrink, where inventory is lost or damaged due to theft or breakage.

The company also reaffirmed its annual sales and profit forecasts.

(Reporting by Granth Vanaik in Bengaluru; Editing by Shilpi Majumdar)