Dollar General

(DG) - Get Report

Wednesday reported a lower third-quarter profit, as higher energy prices hurt spending by low-income consumers, the company's core customer.

The Tennessee-based company reported net income of $71.1 million, or 22 cents a share, compared with $77.9 million, or 23 cents a share, in the third quarter of fiscal 2003. Analysts expected 25 cents a share, according to Thomson First Call.

Revenue increased 11.5% to $1.88 billion, while gross profit slipped to 29.5% of sales, vs. 30.7% in the prior year.

The results included a $7.8 million pre-tax non-recurring inventory adjustment, which primarily represented a change in the company's estimated provision for inventory shrinkage.

The company also said same-store sales increased 3.4% for the month ended Nov. 26.

Dollar General now expects net income for the year to be at the low end of its original guidance, or between $341 million and $350 million, but warned that "the challenging economic environment" was a factor. The consensus forecast is $342.3 million.

"Lower-than-expected consumer discretionary spending during the holiday period may negatively impact the company's ability to meet its expected earnings," the company said.

The company also announced it expects to open approximately 730 new stores, including at least 30 Dollar General Markets, in fiscal 2005.

Shares were flat at $19.76 in the premarket.