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Dollar General (DG) 3Q Earnings Top View As Sales Rise, Updates Forecast

 December 11, 2012 07:19 AM

(By Balachander) Dollar General Corp. (NYSE: DG) posted better-than-expected quarterly earnings, as higher customer traffic drove sales growth and that the discount retailer updated its forecast for the full year.

"Although our performance over the Thanksgiving weekend and start of the holiday season has been encouraging, we continue to be cautious for the remainder of the year," said CEO Rick Dreiling. 

Adjusted earnings per share (EPS) increased 26 percent to 63 cents, topping consensus estimate of 60 cents. Net earnings grew 21 percent to $208 million for the third quarter.

Net sales grew 10.3 percent to $3.96 billion, in-line with Wall Street projections.

[Related -Family Dollar Stores, Inc. (NYSE:FDO) Q1 Earnings Preview: What To Watch?]

Same-store sales advanced 4.0 percent, driven by growth in both customer traffic and average transaction amount.

Gross margin dipped slightly to 30.9 percent from 31.0 percent.

"We are facing a significant same-store sales comparison from our 2011 fourth quarter, which included very strong January sales, growing near-term pressures that are impacting our customers' confidence and spending, and a challenging competitive environment," Dreiling said.

Dollar General anticipates comparable store sales to grow 3 percent to 4 percent for the fourth quarter.

For the full year ending February 2013, the company currently expects adjusted EPS in the range of $2.82 to $2.85, versus prior outlook of $2.77 to $2.85, while analysts expect $2.86. It now sees same-store sales growth of 4.5 percent to 5 percent, compared with 4 percent to 5 percent growth projected earlier.

[Related -U.S. Stocks End Lower Amid Stimulus Concerns; Exacttarget Inc. Soars]

The company currently forecasts total sales growth of 10 percent to 10.5 percent on a comparable 52-week basis, while it earlier projected growth of 10 to 11 percent.

The stock, which has been trading in the 52-week range between $39.83 and $56.04, closed Monday's regular trading session at $46.57.



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