=Dollar General (DG) reported earnings on Thur 31 May 2018 (b/o)

Dollar General misses by $0.03, misses on revs; reaffirms FY19 EPS guidance 

• Reports Q1 (Apr) earnings of $1.36 per share, $0.03 worse than the Capital IQ Consensus of $1.39; revenues rose 9.0% year/year to $6.11 bln vs the $6.18 bln Capital IQ Consensus.  
• Same-store sales increased 2.1% from the first quarter of 2017 due to an increase in average transaction amount, partially offset by a decline in customer traffic. Growth in same-store sales was driven by robust sales of consumables, partially offset by sales declines in the apparel, seasonal and home categories. The Company believes that the effect of unseasonably cold and damp weather on certain product categories negatively impacted same-store sales in the quarter.
• Gross profit as a percentage of net sales was 30.5% in the first quarter of 2018 compared to 30.3% in the first quarter of 2017, an increase of 17 basis points. The first quarter of 2018 gross profit rate increase was primarily attributable to higher initial markups on inventory purchases and an improved rate of inventory shrink. These factors were partially offset by a greater proportion of sales coming from consumables that generally have a lower gross profit rate than other product categories, sales of lower margin products comprising a higher proportion of consumables sales, and increased transportation costs.
• Co reaffirms guidance for FY19, sees EPS of $5.95-6.15 vs. $6.07 Capital IQ Consensus Estimate. Company is reiterating its financial guidance and store growth outlook issued on March 15, 2018. The Company expects net sales to increase approximately 9%, with same-store sales growth estimated to be in the mid-two percent range. The Company expects the fiscal year 2018 operating margin rate to be relatively unchanged as compared to the fiscal year 2017 operating margin rate.