Why Dollar General Stock Is Plunging Today

Dollar General Corp DG reported second-quarter FY23 sales growth of 3.9% year-on-year to $9.80 billion, missing the analyst consensus of $9.92 billion.

Same-store sales decreased 0.1% versus last year, driven by a decline in customer traffic, partially offset by an increase in average transaction amount.

The gross profit margin for the quarter decreased 126 basis points Y/Y to 31.1%. The operating margin compressed from 9.69% to 7.07%, and operating income for the quarter declined 24.2% to $692.3 million.

The company held $353.01 million in cash and equivalents as of August 4, 2023. Year-to-date operational cash flow totaled $726.7 million.

EPS of $2.13 missed the analyst consensus of $2.46.

As of August 4, total merchandise inventories, at cost, were $7.5 billion compared to $6.9 billion as of July 29, 2022. 

The total remaining share authorization for future repurchases was $1.4 billion at the end of Q2 2023.

On August 30, 2023, the company’s board declared a quarterly cash dividend of $0.59 per share on its common stock, payable on or before October 24, 2023, to shareholders of record on October 10, 2023. 

Outlook: Dollar General lowered its FY23 net sales growth outlook from 3.5%-5% to 1.3% - 3.3%.

DG lowered FY23 EPS guidance from $9.83 - $10.68 to $7.10 - $8.30 versus an estimate of $10.01.

The company expects same-store sales growth of a decline of approximately 1.0% to growth of 1.0%, compared to its previous expectation of growth of 1.0% to 2.0%.

Related: Five Below And Dollar General Q2 Earnings Preview: Aiming To Emulate Dollar Tree's Beat

Price Action: DG shares are trading lower by 16.9% at $131.00 in premarket on the last check Thursday.