Q1 results exceed expectations
cDollar General’s sales rose 8.3% to $6.62 billion in the quarter, beating analysts’ forecast of $6.57 billion. Its top-line growth was driven by new stores’ sales and same-store sales growth of 3.8%, partially offset by the loss of sales from stores closed. The company’s same-store sales growth was driven by higher average transaction size and improved customer traffic.
Merchandise categories that delivered strong performance in the quarter included consumables, seasonal, and home categories. Weakness in the apparel category continued in the first quarter. In comparison, Dollar Tree’s (DLTR) net sales rose 4.6% in its first quarter and its same-store sales grew 2.2%.
Dollar General’s adjusted EPS grew 8.8% to $1.48 in the first quarter, driven by higher sales and a lower average share count due to share repurchases. The company’s first-quarter EPS were well ahead of analysts’ estimate of $1.39.
Dollar General maintained its fiscal 2019 guidance even after reporting strong growth. The company’s guidance accounts for tariffs being increased from 10% to 25% on $200 billion in Chinese imports, which became effective May 10. However, the guidance doesn’t account for future tariff changes.
Dollar General expects its sales to grow ~7% in fiscal 2019, and its same-store sales to grow ~2.5%. The company opened 240 new stores in the first quarter and is on track to open 975 new stores in fiscal 2019. It remodeled 330 stores and relocated 27 stores in the first quarter as part of its plan to remodel 1,000 mature stores and relocate 100 stores in the current fiscal year.