Dollar General Warns About Consumer Pressures Even as It Posts Solid Results

Mario Tama / Getty Images outgoing CFO Kelly Dilts said the company is preparing for "increasing pressure on consumer spending as we move through the back half of the year"

Key Takeaways

Dollar General posted better-than-expected results as shoppers looked for discounts. The discount store chain also raised its full-year guidance. However, Dollar General warned that low-income consumers are being pressured by macroeconomic conditions.

Dollar General (DG) shares slipped Thursday as concerns that low-income consumers were facing macroeconomic pressures offset news that the discount retailer beat profit and sales estimates and raised its guidance as shoppers looked for bargains.

The store chain posted second-quarter earnings per share of $1.86, $0.30 above the average forecast of analysts surveyed by Visible Alpha. Sales rose 5% year-over-year to $10.73 billion, and same-store sales grew 2.8%, with both also exceeding expectations.

CEO Todd Vasos credited the performance to Dollar General's "improved execution, along with our progress advancing key initiatives," which he said are "resonating with both existing and new customers as we further enhance our value and convenience proposition."

The company expects full-year EPS of $5.80 to $6.30, sales growth of 4.3% to 4.8%, and same-store sales up 2.1% to 2.6%. Previously, its outlook was for EPS of $5.20 to $5.80, sales growth of 3.7% to 4.7%, and same-store sales up 1.5% to 2.5%.

However, in the call with analysts, outgoing CFO Kelly Dilts said the company is preparing for "increasing pressure on consumer spending as we move through the back half of the year, with Q4 potentially more impacted than Q3," according to a transcript provided by AlphaSense.

Shares of Dollar General were down 1% in recent trading after posting sharp gains before the bell. They have added about 45% year-to-date. TradingView

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