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Dollar General Stock Slides After Earnings Beat, Outlook Update

"We feel very good about the underlying strength of the business, and we are excited about our plans for the second half of fiscal 2021," said CEO Todd Vasos.

Dollar General  (DG) - Get Dollar General Corporation Report posted better-than-expected second quarter earnings Thursday while narrowing its full-year sales and profit forecasts as it moves to hold onto consumers gained during the peak of last year's pandemic.  

Dollar General said earnings for the three months ending in July were pegged at $2.69 per share, down 13.8% from the same period last year but just ahead of the Street consensus forecast of $2.59 per share. Group revenues, Dollar General said, were essentially flat to last year at $8.7 billion, but again beat analysts' estimates of an $8.61 billion tally. Same-store sales fell 4.7%, firmly inside the Refinitiv forecast of a 5.1% decline. 

Looking into the 2021 financial year, Dollar General said it sees net sales in the range of +0.5% to +1.5% compared to 2020 levels, a modest increase from its prior estimate, with same store sales declining between 2.5% and 3.5%. 

Full-year earnings are forecast in the range of $9.60 to $10.20 per share, a 10 cent increase from the lower end of its prior forecast.

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"Despite what remains a challenging operating environment, including additional uncertainties brought on by the Delta variant and pressures on the global supply chain, our team has continued to successfully adapt and deliver for our customers," said CEO Todd Vasos. 

"We remain focused on delivering value and convenience for our customers, while driving long-term sustainable growth and value for our shareholders," he added. "We feel very good about the underlying strength of the business, and we are excited about our plans for the second half of fiscal 2021.”  

Dollar General shares were marked 6.6% lower in early trading immediately following the earnings release to change hands at $219.60 each.

Dollar General results also came amid a series of stronger-than-expected July quarter updates from brick-and-mortar retailers such as Best Buy  (BBY) - Get Best Buy Co., Inc. Report, Foot Locker  (FL) - Get Foot Locker, Inc. Report, Macy's  (M) - Get Macy's Inc Report and Kohl's  (KSS) - Get Kohl's Corporation Report, all of which notched solid same-store sales growth and bullish near-term forecasts.

The Commerce Department's July report on U.S. retail sales showed a bigger-than-expected 1.1% decline from the previous month, but also noted that clothing and clothing accessories sales were up 43.4% from last year to around $17.8 billion.