Dollar General Corp (DG.N) posted a 36 percent jump in quarterly profit and raised its expectations for the year on Monday as the momentum the discount chain saw during the holiday season continued in early 2012.
Still, shares of Dollar General fell in after-hours trading as it said that key shareholders including private equity firm Kohlberg Kravis Roberts & Co LP KKR.UL and Goldman Sachs (GS.N) plan to sell up to 25 million shares, plus up to an another 3.75 million shares to cover any overallotment.
The planned sale would push the percentage of shares owned by Buck Holdings LP down to below 37 percent from its current stake of 44 percent. Buck Holdings is a private investor group that includes affiliates of KKR and Goldman Sachs.
Dollar General, which prices most of its merchandise below $10, generally does well when economic concerns such as high unemployment and food prices push those on very limited budgets to cut spending. Recently, shoppers have focused on buying essentials such as food, crimping sales of clothes and discretionary items.
Dollar General earned $213.4 million, or 63 cents per share, in the fiscal first quarter ended on May 4, up from $157.0 million or 45 cents per share a year earlier.
Analysts, on average, expected it to earn 60 cents per share, according to Thomson Reuters I/B/E/S.
Sales rose 13 percent to $3.9 billion, topping analysts' average forecast of $3.83 billion. Sales at stores open at least a year, or same-store sales, rose 6.7 percent.
Dollar General's sales gains outpaced recent growth at key rivals. In their most recent quarters, same-store sales at Wal-Mart Stores Inc's (WMT.N) Walmart U.S. chain, Family Dollar Stores Inc FDO.N and Dollar Tree Inc (DLTR.O) rose 2.6 percent, 4.5 percent and 5.6 percent, respectively.
Dollar General now expects to earn $2.68 to $2.78 per share this year, up from a prior target of $2.65 to $2.75. It earned $2.22 per share last year and analysts had forecast a fiscal year profit of $2.77 per share.
The company, which is opening some larger stores that emphasize food, still expects this year's same-store sales to rise 3 to 5 percent and total sales to rise 8 to 9 percent.
KKR brought Goodlettsville, Tennessee-based Dollar General back to the public market in November 2009.
The shares fell to $47 in after-hours trading on Monday after closing at $48.49 during regular trading on the New York Stock Exchange.
If Buck Holdings sells nearly 24.6 million shares, its stake in Dollar General would decline from 44 percent to 36.6 percent. If the option is exercised to sell additional shares, its stake would decline to 35.5 percent.
Other shareholders who plan to sell some shares include Chairman and Chief Executive Rick Dreiling, Dollar General said in a filing.
(Reporting by Jessica Wohl in Chicago; Editing by Gary Hill, Leslie Gevirtz and Matthew Lewis)