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Dollar General's Q2 profits rise, company boosts full year outlook

Published: 16:03 30 Aug 2011 BST

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Dollar General Corp (NYSE:DG) announced Tuesday it boosted the lower end of its full year earnings outlook in light of its 25% increase in second quarter adjusted profits, which beat Street estimates.

For the three months ending July 29, the dollar store retailer had net income of $146.0 million, or $0.42 per share, up from $141.2 million, or $0.41 per share, a year ago.

Adjusted for a $58.1 million charge related to the redemption of the company's senior notes, income was $181.4 million, or $0.52 per share, up 25% from $145.1 million, or $0.42 per share, a year earlier.

Revenues rose 11.2% to $3.58 billion. Comparable store sales, or those of locations open at least one year, increased by 5.9%, compared to a 5.1% increase in the same quarter a year ago, largely on higher customer traffic and larger transaction amounts, it said.

The results, which were well above analysts' estimates of 48-cents per share and $3.5 billion in revenues, prompted the company to boost the bottom end of its full year outlook up two cents, to a range of $2.22 to $2.30 per share.

Dollar General also said it expects sales growth of 12% to 14% for the year, and same store sales growth of between 4% to 6%.

"In this period of economic uncertainty, we continue to focus on factors that we can control, and we still expect to deliver strong financial performance in 2011," said CEO Rick Dreiling.

The company's consumables business, which includes beverages, candy, snacks and other packaged foods, saw a higher growth rate than other segments, with revenue improving 13.7% to $2.6 billion in the second quarter.

Season offerings, home products and apparel saw slower sales during the quarter, as consumer discretionary spending was light, Dollar General said.

Revenues in the season products unit improved 6.7%, while home productions rose 6%, and apparel increased a tepid 1.2%.

In New York, Dollar General's shares rose 4.26% as of 10:54 am EDT, to trade at $35.23.

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