DG - Dollar General slides after macro headwinds contribute to earnings miss guidance slash

2023-06-01 07:21:35 ET

Dollar General Corporation ( NYSE: DG ) traded lower on Thursday in the premarket session after falling short of estimates with its Q1 earnings report and slashing sales guidance.

Net sales rose 6.8% for the retailer and same-store sales increased 1.6% to miss the consensus expectation for a gain of 3.8%. Growth in the consumables category was partially offset by declines in the seasonal, home, and apparel categories. Dollar General ( DG ) said the macroeconomic environment has been more challenging than expected, particularly for the company's core customer.

Gross profit as a percentage of sales was 31.6% vs. 31.3% a year ago. The gross profit rate increase was primarily attributable to higher inventory markups, decreased transportation costs, and a decreased LIFO provision; partially offset by increased shrink, markdowns, and inventory damages, as well as a greater proportion of sales coming from the consumables category, which generally has a lower gross profit rate than other product categories.

Net income for the quarter was $514.4M vs. $552.7M a year ago.

Total merchandise inventory at cost was $7.3B vs. compared to $6.1B. The higher inventory tally was noted to primarily reflect the impact of product cost inflation.

Looking ahead, Dollar General ( DG ) sees full-year comparable sales growth of +1% to +2% vs. +3% to +3.5% prior range and +3.3% consensus.

Shares of Dollar General Corporation ( DG ) fell 7.77% in premarket trading to $185.46 to mark a new 52-week low. Dollar Tree ( DLTR ) was down 1.25% and Five Below ( FIVE ) peeled off 0.75% in the early session.

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