Dollar General has beaten expectations with its net sales, but its net income has dropped 20.2%. This is due to increased costs amid COVID-19, but the company still expects growth in the coming months. Read on to find out how the market is reacting to their latest report. #DG #netincome #earningsreport
Dollar General said in its earnings announcement on Thursday that its second-quarter net sales rose 4.2% from a year earlier to $10.2 billion, above expectations of $9.8 billion. However, net revenue fell 20.2 percent to $374.2 million from $468.8 million.
Chief Executive Todd Vasos said revenue and same-store sales were nearly flat and below expectations.Growth in consumer products drove same-store sales growth, as customer spending remained focused on necessities. However, this increase was partially offset by declines in seasonal home and apparel.
Dollar General lowered its full-year outlook as it expects continued weak sales. The company now expects net sales growth of between 4.7% and 5.3%, and same-store sales growth of between 1% and 1.6%, compared with 2% to 2.7%, Vassos said on an earnings call last Thursday. Lower-income consumers, Dollar General's core customers, continue to struggle in the current economy. Nevertheless, the company is still growing its share of sales in its daily necessities market and its share of merchandise sold by volume.
Dollar General notes that customers making less than $35,000 a year account for about 60% of the company's total sales. At the same time, Vassos said 60 percent of households in this group said they had to buy fewer basic necessities due to the higher cost of daily necessities, as they were stretched by the rising costs of other basic necessities - rent, utilities and health care.
"In our view, the trend is very strong and low-end consumers are still very financially strapped, especially when it comes to their ability to feed their families and support their families," Vassos said. "Consumers are very cash-flow strapped right now, even more so than we saw in the first quarter."
”