Despite poor earnings, Dollar General said it was happy about progress made during the second quarter.
However, expectations for the rest of the fiscal year have been tempered, following a quarter which saw same-store sales decrease 0.1% and gross profit drop from 32.3% in Q2 2022 to 31.1% in 2023.
Still, Dollar General, based in Goodlettsville, Tenn., seems satisfied with the direction its heading.
“While we are not satisfied with our overall financial results, we made significant progress in the second quarter improving execution in our supply chain and our stores, as well as reducing our inventory growth rate and further strengthening our price position,” said Jeff Owen, Dollar General’s chief executive officer.
“These actions were an important driver of improving customer traffic trends and growing total market share in the second quarter. In addition, we executed nearly 850 real estate projects during the quarter, further extending our reach and expanding our ability to serve both new and existing customers.”
Net sales did increase 3.9% to $9.8 billion year-over-year during Q2. Operating profit fell 24.2% to $692.3 million. A year ago, it was $913.4 million.
Similarly, net income took a big hit as it was down 30.9% year-over-year at $468.8 million.
Following the soft quarter, Dollar General revised its outlook for FY 2023. Originally looking at net sales growth between 3.5% and 5%, the discount retailer is now projecting net sales growth in the 1.3% to 3.3% range. Same-store sales growth is now looking at a worst-case scenario drop of 1%. The original forecast called for growth of 1% to 2%.
“We are pleased with the advancements we have made, and we are now taking further actions and making additional investments to accelerate our progress and ultimately serve our customers even better,” said Owen. “While these investments will pressure our 2023 results, we believe they will further strengthen our foundation as we move into 2024 and focus on driving sustainable growth and creating long-term shareholder value.”
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