Dollar General Corp. (DG) shares are up 1.6% in early morning trade on Thursday after the company’s Q4 earnings beat sales estimates. The budget-friendly retailer announced that the company beat sales estimates and will follow in the footsteps of Wal-Mart (WMT) and raise wages for store managers.
The company will provide additional training for managers in an effort to improve customer service and quality in stores. The move will impact earnings this year. The company will pay an additional $70 million in pay hikes, according to estimates.
Dollar General Corp. (DG) Fourth Quarter Sales
Fourth-quarter sales, ended February 3, rose to $6.01 billion, up 13.7% year-over-year. The company reported a slight decline in store traffic which was offset by higher average spending per customer. Analysts pegged the company’s sales at $5.97 billion on the quarter.
Retailers are putting pressure on Dollar General Corp. (DG) and their competitors by aggressively discounting their offerings to improve store traffic.
Dollar General forecasts an EPS of $4.25 – $4.50 for the 2017 year. Analysts estimate an EPS of $4.39.
The company’s EPS for the final quarter of the year beat analyst expectations of $1.41 per share. Dollar General posted an EPS of $1.49 on net income of $414.2 million the prior year. The company posted net income of $376.2 million with an EPS of $1.30 per share.
Dollar General’s stock suffered in recent weeks following disappointing earnings from Target (TGT). The retail giant’s CEO fueled the downward trend for Dollar General Corp. (DG), noting a shift in consumer shopping with a focus on pricing and digital resources.
Increasing margin competition from retailers is expected to be a focal point for Dollar General in 2017.
Dollar General’s performance over the past 6-year period has seen sales jump from $11.8 billion to over $21 billion in 2016. Revenue growth has slowed, causing concern among investors. The company’s growth is down from 15% to 6%, as more retailers discount products to compete with low-priced online competition.