Dollar General profit up, revises 2013 guidance

GOODLETTSVILLE, Tenn. (AP) — Dollar General's fiscal first-quarter net income increased 3% as more customers visited its stores and shoppers spent more per transaction.

But the discounter cut the high end of its full-year adjusted earnings and revenue forecasts to account for moderating sales growth and a lower-than-expected gross profit rate.

Shares fell more than 5% in premarket trading Tuesday.

For the period ended May 3, Dollar General Corp. earned $220.1 million, or 67 cents per share. That compares with $213.4 million, or 63 cents per share, a year earlier.

Removing debt refinancing costs and other items, earnings were 71 cents per share. This met the expectations of analysts polled by FactSet.

Revenue rose 9% to $4.23 billion from $3.9 billion. Wall Street was looking for $4.24 billion in revenue.

Dollar General said that sales of consumables like groceries were much better than non-consumables such as seasonal products and home items due to bad weather and financial pressures — including a payroll tax increase — that many consumers are faced with.

Gross profit declined in the quarter because of factors such as increased markdowns and a higher mix of lower-margin consumables.

Revenue at stores open at least a year, a key indicator of a retailer's health, climbed 2.6%. This figure excludes results from stores recently opened or closed.

The company now anticipates fiscal 2013 adjusted earnings of $3.15 to $3.22 per share, with revenue up 10% to 11%. It previously predicted adjusted earnings of $3.15 to $3.30 per share and a revenue increase of 10% to 12%.

The revised guidance implies revenue of $17.62 billion to $17.79 billion, based on 2012's $16.02 billion.

Analysts expect full-year earnings of $3.28 per share on revenue of $17.7 billion.

The stock dropped $2.88, or 5.4%, to $50.67 in premarket trading less than two hours before the market open.

Dollar General had 10,662 stores in 40 states at quarter's end.