Dollar General’s 1Q17 top line
Dollar General (DG) reported its results for fiscal 1Q17 on May 31. The company’s top line rose 6.5% YoY (year-over-year) to $5.6 billion, driven by 6.8% YoY growth in demand for consumables, 6.7% in apparel, and 6.2% in seasonal products. This top line beat Wall Street’s estimate by $25 million.
Transaction sizes and same-store sales
Same-store sales growth stood at 0.7% during the quarter. While the company reported an increase in the average transaction amount, traffic trends remained negative. Sales growth was driven by the 293 new stores that the company opened during the quarter, as compared to 1Q16.
Todd Vasos, Dollar General’s CEO (chief executive officer), stated: “For the first quarter of 2017, I am pleased with our earnings results, which reflect solid management of the business in a difficult retail environment as we overcame our most challenging comparisons from the prior year.”
Vasos added: “Our same-store sales improved as we moved past the delay in income tax refunds and the timing shift of the later Easter holiday. We continue to execute on our focused strategy and implement our operating initiatives, which we believe will improve customer traffic and transactions.”
How did Dollar General’s competitors fare in recent results?
Dollar Tree (DLTR) released its first quarter results on May 25, reporting a 4% YoY increase in its top line to $5.3 billion, which was in line with the consensus estimate. Its comparable same-store sales or comps rose 0.5%.
Big-box retailer Wal-Mart Stores (WMT), which reported its results on May 18, missed the consensus estimate for its top line. The company’s total sales stood at $117.5 billion, or 1.4% higher YoY, falling $240 million short of Wall Street’s estimates. However, the retailer recorded a 1.4% jump in its US sales comps, as compared to the consensus expectation of a 1.3% rise.
Notably, investors looking for exposure to Dollar General through ETFs can consider the ProShares DJ Brookfield Global Infrastructure ETF (TOLZ), which invests 4% of its total holdings in DG.
Continue to the next part (below) for a closer look at Dollar General’s profitability and margins in 1Q17.