Dollar General reports upbeat results in 2019’s Q3 despite increased tariffs on Chinese imports

on Dec 9, 2019
Updated: Mar 11, 2020
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  • Dollar general beat analysts' estimates of revenue, sales, and earnings per share in the third quarter.
  • The discount retailer opened hundreds of stores in new locations in 2019.
  • The store revised its profit guidance for fiscal 2019 from $6.60 per share to $6.65 per share.
  • Dollar General's net sales gained 8.9% in the third quarter of 2019.
  • The stock was seen trading 5% higher in premarket trading on Thursday.

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The American chain of variety stores, Dollar General Corporation, announced its earnings report for the third quarter on Thursday. In terms of same-store sales, the company’s performance in the third quarter marked the best in the past five years. The store cited a broader range of products and renovation of the stores as the reasons that have contributed to the upbeat results.   

Following the better than expected earnings report, the store revised its profit guidance for fiscal 2019. In an earlier estimate, expectations for profit for the full-year were confined to $6.60 per share. Dollar General has now upgraded its expectation for profit to $6.55 to $6.65 per share.

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Dollar General Launched Hundreds Of New Stories In 2019

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In an attempt to pose a serious competition for the rival grocers and retailers, the store has had a busy year of launching hundreds of stores on new locations and flooding the existing ones with a broader range of products including health, food, and beauty related products.

As per the Q3 earnings report, Dollar General has been successful in its attempt as it noted a significant 4.6% increase in same-store sales in 2019’s third quarter. Based on the Refinitiv’s data, analysts had forecasted the same-store sales to print a growth of 3.34% in the quarter that ended on November 1st.

Previously, the company was expecting same-store sales to increase by low-to-mid 3% in fiscal 2019. The upbeat Q3 results announced revised guidance that now expects the same-store sales to hike by mid-to-high 3% in the full-year report.

Dollar General’s better than expected results are in contrast to what its staunch rival, Dollar Tree Inc. had announced recently. Weighed by the increased tariffs on Chinese products, the discount retailer was unable to meet its target for sales and revenue. Consequently, Dollar Tree had curtailed its profit expectation for fiscal 2019.

Dollar General’s Net Sales Gained 8.9% In The Third Quarter

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In terms of net sales, Dollar General recorded an 8.9% increase in the third quarter. At $6.99 billion, the store beat the analysts’ estimate of $6.92 billion by a significant margin. 2019’s Q3 noted the discount retailer’s net income at $365.6 million. The company had registered $334.1 million in net income in the same quarter last year.

Refinitiv’s survey had made the analysts forecast $1.38 of earnings per share for Dollar General in 2019’s third quarter. Printing $1.42 of earnings per share, the store beat analysts’ estimates on all fronts in its Q3 earnings report. The report stirred a 5% increase in share prices in premarket trading.

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