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Dollar General
turned in mixed quarterly results and a disappointing profit forecast for the year as it felt the impact of higher interest rates.
The company (ticker: DG) said earnings per share for the fourth quarter of its 2022 fiscal year, which ended Feb. 3, came in at $2.96. Analysts tracked by
FactSet
were looking for $2.95 per share. Net sales increased 17.9% to $10.20 billion in the quarter, slightly lower than the $10.24 billion expected.
For the 2023 fiscal year, the company expects earnings per share growth of 4% to 6%, which implies a profit of $10.58 to $10.78 a share. Analysts were looking for $11.29.
Dollar General
said the outlook for profit growth includes a negative impact of about three percentage points due to higher borrowing costs in fiscal 2023.
The stock fell nearly 2% to $215.00 in premarket trading on Thursday.
CEO Jeff Owen said the company will invest an additional $100 million in its stores, mainly for labor, as it looks to build sales momentum, capture market share, and enhance shoppers’ experiences. Dollar General also plans to open 1,050 stores this year.
Inflation has been driving consumers to discount stores, which generally perform well throughout economic cycles. That drove investors to the stock in 2022, giving it a gain of 1% while the S&P 500 lost nearly 20%.
Jefferies analyst Corey Tarlowe, in a note shortly after results, said Dollar General is one of the best names to own in the present environment and recommended buying the shares. He has a target of $285 for the stock price, implying a 31% gain from current levels.
The company also increased its quarterly cash dividend to 59 cents a share from 55 cents.
Write to Karishma Vanjani at karishma.vanjani@dowjones.com
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