By Phil Wahba
March 13 Retailer Dollar General Corp
reported lower-than-expected sales for the holiday quarter on
Thursday, blaming weak consumer confidence among its low-income
shoppers, cold weather and aggressive competition.
Its forecast for the new fiscal year also disappointed, and
shares fell 3.4 percent to $57.30 in afternoon trading.
A bright spot was the sale of tobacco products, which Dollar
General started carrying in mid-2013, but the discount chain
said its customers are generally still pinching their pennies.
"Our core customer doesn't feel she is out of the woods yet
economically, and continues to be cautious with her spending,"
Chief Executive Rick Dreiling told analysts on a conference
call. He cited cuts in government assistance plans, such as food
stamps, among factors hitting low-income customers.
Dollar General follows Wal-Mart Stores Inc, Target
Corp, Kohl's Corp and other retailers catering
to lower-income shoppers in reporting tepid numbers in what
analysts have called a particularly competitive holiday season.
Sales in the fourth quarter ended on Jan. 31 rose 6.8
percent to $4.49 billion. Analysts on average were expecting
$4.62 billion, according to Thomson Reuters I/B/E/S.
Sales at stores open at least a year rose 1.3 percent, while
Wall Street thought they would increase 4.5 percent. Without
tobacco, same-store sales would have been unchanged.
Still, tobacco products, while offering a smaller gross
profit margin than other products, are bringing in more
shoppers, and more of them are buying other products when they
come in to a Dollar General store, executives said on the call.
Last month, CVS Caremark Corp said it would stop
selling tobacco products this year, which analysts said would
help convenience stores, and to a lesser extent, dollar stores.
Dreiling said he expects some benefit from the CVS decision.
Earnings rose to $322.17 million, or $1.01 per share, from
$317.4 million, or 97 cents per share, a year earlier.
Dollar General expects same-store sales to be up 3 percent
to 4 percent this fiscal year. It forecast a profit of $3.45 to
$3.55 per share, while analysts expected $3.69.