Dollar General Corp. (NYSE:DG), a discount retailer, fell to the lowest price in more than two months in early trading on Tuesday after trimming the top end of its full-year earnings forecast, citing moderating sales growth and a lower gross profit rate.
The shares dropped 7.8 percent to $49.33 at 9:31 a.m. in New York, the lowest price since March 20.
Full-year adjusted earnings per share will be as much as $3.22, compared with a previous forecast of a maximum of $3.30, the Goodlettsville, Tennessee-based company said in a statement on Tuesday. This trailed the average estimate of 26 analysts which was for a profit of $3.28 a share.
“We have updated our outlook for the year to reflect moderating sales growth and a lower expected gross profit rate than we previously anticipated,” the company said, citing Chief Executive Officer Rick Dreiling.
"Sales of non-consumables are expected to remain challenging, and we anticipate a continued shift to lower margin items within consumables and higher inventory shrink."
The company said it expected same-store sales to rise 4 percent to 5 percent through the year as key initiatives, including the rollout of tobacco products, gain traction.
Net income for the quarter that ended May 3 rose 3 percent to $220.1 million, or 67 cents a share. Adjusted earnings were 71 cents a share, matching analysts' expectations. Revenue rose 8.5 percent to $4.24 billion, also in line with expectations.
Same-store sales increased 2.6 percent, reflecting growth in the consumables category, which more than outweighed weak sales of weather-sensitive products.
The stock rose 21 percent this year through Monday, outpacing the 15 percent gain for the Standard and Poor’s 500 Index (INDEXSP:.INX).