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Dollar General Stock Slips After Q3 Earnings Beat, 2021 Profit Forecast Boost

Dollar General lifted its full year profit forecast following stronger-than-expected third quarter earnings as shoppers continue to search for value amid the highest levels of consumer price inflation in 30 years.

Dollar General  (DG) - Get Dollar General Corporation Report posted stronger-than-expected third quarter earnings Thursday, and lifted its full-year sales forecast, as shoppers move to discounted retailers amid the highest levels of consumer price inflation in more than thirty years. 

Dollar General said diluted earnings for the three months ending in October were pegged at $2.08 per share, down 10% from the same period last year but 7 cents ahead of the Street consensus forecast. 

Group revenues, Dollar General said, rose 3.9% from last year at $8.5 billion, essentially matching analysts' estimates of an $8.495 billion tally. Same-store sales fell 0.6%, just outside the Refinitiv forecast of a 0.5% decline, but were up 11.6% from 2019 levels.

Looking into the 2021 financial year, Dollar General said it sees net sales rising by between 1% and 1.5%, a modestly boost from its prior range of +0.5% to +1.5%, with same store sales declining between 2.5% and 3%.

“We are pleased with our third quarter results, and I want to thank our associates for their unwavering commitment to meeting the needs of our customers, communities, and each other,” said CEO Todd Vasos. “During the quarter, we made meaningful progress advancing our key initiatives, while continuing to successfully deliver for our customers, despite a challenging operating environment."

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“Overall, we remain focused on our mission of Serving Others, and are confident in our plans to drive long-term sustainable growth and value for our shareholders,” he added.

Dollar General shares were marked 1.4% lower in early trading immediately following the earnings release to change hands at $21 each. 

Late last month, discount rival Dollar Tree  (DLTR) - Get Dollar Tree, Inc. Report posted third quarter earnings that were largely in-line with Street forecasts, but lifted its full-year profit forecast while noting that "shoppers are increasingly focused on value in this inflationary environment."

October retail sales rose 1.7% from the previous month to a collective $638.2 billion, the Commerce Department said on November 16, well ahead of the Street consensus forecast of a 1.2% gain, and 16.3% higher from the COVID-hit period in the fall of last year.  

U.S. consumer price inflation accelerated to the fastest pace in three decades last month, data from the Bureau of Labor Statistics indicated last week, as record-high energy prices and supply chain disruptions lifted the heading reading to 6.2%.

So-called core inflation, which strips-out volatile components such as food and energy prices, rose 0.6% on the month, and 4.6% on the year, the report noted, with both readings topping the Street consensus forecast.

Wage gains for the month were solid as well, however, with average hourly earnings rising 4.9% from last year as 531,000 new jobs were added to the economy, taking the headline unemployment rate to a new post-pandemic low of 4.6%.