Dollar General Corp.(NYSE: DG) stock crashed over 7.5% on August 31st, 2017 (as of 11:26AM EDT; Source: Google finance) as the group’s bottom line disappointed. Net income fell to $295 million, or $1.08 per diluted share, during the second quarter of 2017 from a net income of $307 million, or $1.08 per diluted share, in pcp. For the Second Quarter of 2017, Net sales enhanced 8.1% yoy to $5.83 billion while Same-store sales enhanced 2.6% driven by better average transaction amount and customer traffic. Positive results in the consumables and seasonal categories was offset by negative results in the home products and apparel categories.
Gross profit, as a percentage of net sales, fell 47 basis points to 30.7% during the second quarter of 2017 hurt by rising markdowns, mainly for promotional activities, coupled with a greater proportion of sales of consumables, which generally have a lower gross profit rate.
For the 26-Week Period also, Gross margin fell 47 basis points to 30.7% in the 2017 second quarter, a decrease of 47 basis points from pcp. Net sales surged 7.3% yoy during the period while Same-store sales enhanced 1.7 percent, on the back of rise in average transaction amount. However, their net income fell to $574 million, or $2.09 per diluted share, from a net income of $602 million, or $2.11 per diluted share, for the prior corresponding period.
Dollar General bought back 1.0 million shares of their common stock during the quarter under their share repurchase program at an average price of $71.92 per share. For 2017, they forecast a fiscal 2017 GAAP diluted earnings per share of $4.35 to $4.50, against earlier guidance of $4.25 to $4.50. They expect their same-store sales growth of slightly positive to an increase of 2%. Dollar General expects fiscal 2017 net sales to enhance in the range of 5% to 7%. Expected capital expenditures for fiscal 2017 remain between $715 million and $765 million. Dollar General has an 8.7% upside and a target price of $79.5 (as per 9 analysts consensus target; Source: tipranks.com)