Dollar General Corp. (NYSE:DG) stock tumbled 14% in pre-market trading after posting weaker-than-expected second-quarter results, due in part to higher shrinkage, as well as its lower guidance for the full year.
The Goodlettsville, Tennessee-based company reported net income of $468.8 million, or $2.13 a share, for the quarter to August 4, down from $678.0 million, or $2.98 a share, in the year-earlier period. Sales rose to $9.80 billion from $9.4 billion
The FactSet consensus was for EPS of $2.47 and sales of $9.926 billion.
Gross profit as a percentage of sales dipped to 31.4% from 32.3% a year ago, due to lower inventory markups and increased shrink, markdowns, and inventory damages, the firm said.
Increased shrinkage, a retail term for theft, has been a theme of a number of retail updates this reporting season.
"While we are not satisfied with our overall financial results, we made significant progress in the second quarter improving execution in our supply chain and our stores, as well as reducing our inventory growth rate and further strengthening our price position," said Jeff Owen, chief executive officer.
The discount retailer also lowered guidance and now expects sales to be up 1.3% to 3.3% for the year, compared with prior guidance of up 3.5% to 5.0%.
It expects EPS of about $7.10 to $8.30, or a decline of 34% to 22%, compared with prior guidance for a decline of about 8% to flat growth.