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Dollar General

(DG) - Get Free Report

fell Thursday after reporting cost overruns that left first-quarter earnings a penny shy of Wall Street estimates.

The Goodlettsville, Tenn., discount chain earned $71.3 million, or 22 cents a share, in the three months ended July 30, up from earnings of $59.9 million, or 18 cents a share, last year. Revenue rose 11% to $1.84 billion.

Dollar General's latest quarter featured a convoluted tax situation that was evidently factored out of analyst estimates. In the period, the company reversed income-tax accruals worth $7.4 million, or 3 cents a share, on the bottom line, a benefit that dropped its effective tax rate to 31.5% from 36.2% last year. Without the gain, the effective tax rate would have risen to 37.5% because of the expiration of employment credits.

Analysts surveyed by Thomson First Call were forecasting earnings of 20 cents a share and revenue of $1.84 billion in the most recent quarter.

Dollar General's shortfall reflected an SG&A expense of $428.9 million, or 23.35% of revenue, in the 2004 quarter compared with $371.1 million, or 22.47% of revenue, last year. It cited higher rent, "costs associated with store physical inventory counts," pay for workers doing remodeling, the cost of a new debit card program and consultant fees.

Dollar General fell 73 cents, or 3.7%, to $18.83 in early trading.