Dollar General Q4 Earnings Weak, Sees FY25 EPS Below Market; But Stock Climbs On Sales View

Dollar General Corporation

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(RTTNews) - Discount store major Dollar General Corp. reported Thursday weak fourth-quarter profit, and issued fiscal 2025 earnings outlook below the Street.

However, Dollar General shares were gaining around 9 percent in the pre-market activity on the NYSE after the firm projects higher net sales and same-store sales in fiscal 2025 after reporting improved quarterly sales results.

In addition, the company has updated its long-term financial framework, and is targeting, over the next five years, net sales growth of around 3.5 percent to 4 percent, same-store sales growth of approximately 2 percent to 3 percent, and earnings per share growth of 10 percent+.

Further, as part of the store portfolio optimization review of its Dollar General and pOpshelf bannered stores, the company said it plans to close 96 Dollar General stores and 45 pOpshelf stores, and convert an additional six pOpshelf stores to Dollar General stores in the first quarter of fiscal 2025.

Todd Vasos, Dollar General's chief executive officer, said, "As we look to build on the substantial progress we made on our Back to Basics work in fiscal 2024, we believe this review was appropriate to further strengthen the foundation of our business. While the number of closings represents less than one percent of our overall store base, we believe this decision better positions us to serve our customers and communities."

Looking ahead, for the full-year 2025, Dollar General expects earnings per share of around $5.10 to $5.80 with a year-on-year sales growth of approximately 3.4 to 4.4 percent.

In fiscal 2024, Dollar General has posted earnings per share of $5.11 on sales of $40.612 billion.

The Wall Street analysts on average expect the company to report earnings of $5.85 per share on sales of $42.25 billion, a growth of 4.14 percent from last year. Analysts' estimates typically exclude special items.

Same-store sales growth is expected in the range of approximately 1.2 percent to 2.2 percent, compared to a growth of 1.4 percent a year ago.

The company is also reiterating its plans to execute approximately 4,885 real estate projects in fiscal 2025, including opening approximately 575 new stores in the U.S. and up to 15 new stores in Mexico. The plan also includes fully remodeling approximately 2,000 stores, remodeling around 2,250 stores through Project Elevate, and relocating approximately 45 stores.

Further, the Board of Directors on March 11 declared a quarterly cash dividend of $0.59 per share, payable on or before April 22, to shareholders on the record as of April 8.

In its fourth quarter, Dollar General's net income totaled $191.217 million or $0.87 per share, a decrease of 52.4 percent from $401.813 million or $1.83 per share last year.

The latest results reflected a negative impact of approximately $0.81 per share related to the store portfolio optimization review.

Analysts had expected the company to earn $1.50 per share.

In the quarter, operating profit decreased 49.2 percent to $294.2 million.

The company's net sales for the period rose 4.5 percent to $10.304 billion from $9.858 billion last year. The Street was looking for sales of $10.26 billion for the quarter.

The net sales increase was driven by positive sales contributions from new stores and 1.2 percent growth in same-store sales, partially offset by the impact of store closures.

Same-store sales increase reflected an increase of 2.3 percent in average transaction amount and a decrease of 1.1 percent in customer traffic.

In the pre-market trade on the NYSE, Dollar General shares were trading at $81.50, up 8.88 percent.

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