Even as it works to mitigate supply chain and inflation issues, Dollar General Corp. posted a first quarter earnings and sales beat on Wall Street estimates.
Net income was $552.7 million, or $2.41 per diluted share, the company reported, versus $667.7 million, or $2.82 per diluted share, in the year-before quarter. Comparable sales decreased 0.1%, but net sales increased 4.2% to $8.75 billion in the quarter year over year.
Dollar General topped a MarketBeat analyst consensus for earnings per share, at $2.31, and sales, at $8.71 billion. Operating profit decreased 17.9% to $746.2 million versus the year-earlier period, Dollar General indicated.
The net sales increase was driven primarily by positive sales contributions from new stores, partially offset by the slight comp decline and the impact of store closures, the company stated. A decline in customer traffic, partially offset by an increase in average transaction amount, drove the comp decline. An increase in the consumables category partially offset comp sales declines in the seasonal, apparel and home products segments versus a year prior.
Todd Vasos, Dollar General’s CEO, said in a conference call that lapping last year’s first quarter, which was bolstered by U.S. Federal Government stimulus checks, was a factor in comparative results. He added that although cost inflation is something a value retailer must manage to the best of its ability, higher prices on gas and everyday needs are affecting shopping patterns and may have a positive effect on a company with more than 18,000 stores operating in a high proportion of neighborhoods across the United States. The desire to stay close to home while shopping is something that can drive Dollar General core shoppers through its doors as they forgo longer shopping trips, but it also can prompt visits from somewhat more affluent consumers also looking to soften the blow of higher prices.
Vasos said, “Despite ongoing headwinds due to supply chain pressures and heightened inflation, we remained focused on controlling what we can control and delivered solid financial results, which exceeded our expectations for sales and EPS for the quarter. During the first quarter, we executed more than 800 real estate projects, and made significant progress advancing our key strategic initiatives to enhance the value and convenience proposition for our customers. We continue to drive strategic innovation as we further differentiate Dollar General in the discount retail channel, while delivering long-term sustainable growth and value for our shareholders.”