GOODLETTSVILLE, Tenn. (AP) – Dollar General Corp. said Tuesday that its fiscal third-quarter net income rose 21 percent, helped by strong demand for candy and snacks.
But the retailer said that while its sales over the Thanksgiving weekend and the start of the holiday shopping season were encouraging, it remains cautious about the rest of the year, noting that consumer spending remains tight.
Its shares fell 7 percent in afternoon trading, dropping $3.30 to $43.27. Its shares have fallen over 20 percent from a 52-week high of $56.04 in mid-July. They fell as low as $39.83 in mid-January.
For the quarter ended Nov. 2, Dollar General earned $207.7 million, or 62 cents per share, up from $171.2 million, or 50 cents per share, in the same quarter last year. Excluding one-time items, the company posted an adjusted profit of 63 cents per share.
Revenue rose 10 percent to $3.96 billion from $3.6 billion.
Analysts, on average, expected earnings of 60 cents per share on $3.96 billion in revenue, according to a FactSet poll.
The Goodlettsville, Tenn.-based company said its revenue at stores open at least a year increased 4 percent, helped by both increases in customer traffic and the average amount spent by each shopper. The metric is a key measure of a retailer's health, because it excludes revenue at stores that recently opened or closed.
Candy, snacks and perishable items posted some of the quarter's biggest sales increases, while demand for home and seasonal items also grew, the company said.
Based on its results for the third quarter and its expectations for the rest of the year, Dollar General said it now expects to post an adjusted profit for the full year of $2.82 to $2.85 per share. The guidance includes a gain of about 4 cents per share related to the favorable resolution of tax audits in the second quarter.
Sales are expected to grow between 8 and 8.5 percent. Based on the company's 2011 revenue of $14.81 billion, the guidance projects 2012 revenue of $15.99 billion to $16.07 billion.
The company's previously projected an adjusted profit of between $2.77 and $2.85 per share, including the tax settlement, on sales growth of 4 to 5 percent. Analysts expect a profit of $2.85 per share on $16.12 billion in revenue.
Dollar General also said it expects to open about 625 new stores this year, with 479 of those opened by the end of the third quarter, bringing its total to 10,371 as of Nov. 2. The company said it expects to open about 635 more new stores in fiscal 2013.
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