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Dollar General (DG) shares jumped about 8% today, after the overwhelming second-quarter earnings forecast. He also raised his forecast for the 2019 financial year.
Second quarter performance
Dollar General net sales increased 8.4% to $ 6.98 billion in the second quarter of fiscal 2019, which ended August 2nd. It exceeded analysts' estimate of $ 6.89 billion. The company has outperformed its competitor Dollar Tree (DLTR). In the second quarter, Dollar Tree sales increased 3.9% to $ 5.74 billion, while same-store sales increased 2.4%. The Dollar General stock was up an impressive 9.7% at 10:09 am today. In contrast, Dollar Tree was down 0.1%.
Sales of new stores and SSSG (4.0% growth in store sales) contributed to Dollar General's second quarter sales. The company has exceeded expectations by 2.4% of analysts' same-store sales. Enhanced product offerings and other strategic initiatives, including store renovations, helped boost sales in the second quarter. Dollar General sales in the first quarter increased 8.3%, while SSSG sales were 3.8%.
Adjusted EPS of $ 1.74 in the company's second quarter crushed analysts' estimate of $ 1.57. In addition, the Company's adjusted EPS increased 14.5% year-over-year. Higher sales and lower interest expense resulted in growth in the Company's adjusted EPS. In addition, a reduction in the average number of shares diluted as a result of share buybacks boosted its adjusted EPS for the second quarter.
The Company's second quarter adjusted EPS excludes the impact of legal fees totaling $ 31 million.
Improved Dollar General Outlook
Dollar General has raised its outlook for fiscal 2019 following its strong performance in the second quarter. The company now expects its net business figure for fiscal year 2019 to increase by about 8%. Previously, he forecast sales growth of about 7%.
Dollar General expects a SSSG for the 2019 fiscal year ranging between 3% and 3%. Its previous growth forecasts were about 2.5% for the SGSS. The company expects EPS for the 2019 fiscal year ranging from $ 6.36 to $ 6.51, compared with forecasts of $ 6.30 to $ 6.50 previously. He expects adjusted EPS of $ 6.45 to $ 6.60. Investors welcomed the improved outlook as they were concerned about the effects of higher tariffs.
The company has invested in several initiatives to improve its business. Thanks to its initiative DG Fresh, it adopts a model of automatic distribution of fresh and frozen products. Its Fast Track initiative aims to improve its stock position and labor productivity.
Dollar General also announced today the promotion of Jeffery C. Owen, Executive Vice President of Store Operations, to the position of Chief Operating Officer. Steven G. Sunderland will be the new Executive Vice President of Store Operations. The company said these appointments were effective August 27.
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