Dollar General posts smaller-than-expected fall in sales

Dollar General reiterated its full-year guidance on Thursday, after the US retailer posted a smaller-than-expected drop in quarterly sales.

The discounter said net sales increased 2.4% in the 13 weeks to 3 November, to $9.7bn, while like-for-like sales eased 1.3%.

Analysts had been expected the third-quarter fall in same-stores sales to be closer to 2.1%.

Operating profit fell 41.1%, to $433.5m. The company has been offering a number of discounts and promotions to clear excess stock, with the total merchandise inventory falling 1.8% year-on-year.

As a result, Dollar General said it continued to expect full-year net sales growth in the range of 1.5% to 2.5%, with same-store sales growth falling by between 1.0% and 0.0%.

Diluted earnings per share are expected to come in between $7.10 and $7.60.

Todd Vasos, Dollar General’s recently appointed chief executive, said: “While we are not satisfied with our financial results for the third quarter, including a significant headwind from inventory shrink, we are pleased with the momentum in some of the underlying sales trends, including positive customer traffic, as well as market share gains in both dollars and units.

“We continue to believe our model is relevant in all economic cycles.”

General Dollar said it planned to add 800 new stores in the 2024 fiscal year, alongside 1,500 remodels and 85 relocations. It said the plans were a “modest slow down” compared to previous years, which it called “prudent in this environment”.

As at 1300 GMT, shares in Dollar General - which have fallen nearly 46% so far this year - were up 3% in pre-market trading.

Vasos was chief executive of Dollar General between 2015 and 2022, before being reappointed in autumn.