Discount retailer Dollar General Corp. reported Thursday that profits increased 12.5 percent in the first quarter, driven by new store sales and higher average markups. Its stock price climbed after the report.
The discount retailer reported net income of $67.8 million for the quarter, or 20 cents per share, up from $60.3 million, or 18 cents a share, in the first quarter of 2003. The performance met the expectation of analysts surveyed by Thomson First Call.
"We are pleased with the results of the quarter," chairman and CEO David Perdue told investors Thursday.
Shares rose $1.18, or 6.3 percent, to $19.93 in midday trading on the New York Stock Exchange.
Dollar General reported net sales increased 11.4 percent to $1.75 billion in the quarter ending April 30, from $1.57 billion in the first quarter of 2003.
The Goodlettsville-based company said it increased its gross profit to $512.3 million, or 29.3 percent of sales, from $451.9 million, or 28.8 percent of sales, as it increased the markup on items.
The retailer, which sells a mix of products to low-income customers, said many shoppers are being affected by higher prices for milk and gas. But Perdue said it could mean good things for Dollar General.
"Our customers need us more than ever," he said.
The company said it continues to be on pace to open 675 new stores for the year, and finished the first quarter with 244 new stores. Same-store sales increased 3 percent.
Dollar General said it is working out the kinks on an automated inventory system that helps it focus on profitable products rotating quickly through its stores.
"We are particularly focused that we keep in stock on our top-selling items," Perdue said.
Dollar General said it continued to repurchase stock, buying about 8.1 million shares of its common stock in the quarter at a total cost of $152.6 million.
The company, authorized to buy back a total of 12 million shares through next March, said it has bought a total of about 10.5 million shares to date.
Dollar General has recently cleared a costly investigation by the SEC as it tries to work past restatement of its 1998 and 1999 financial statements.
Dollar General is a discount retailer with more than 6,930 stores in 29 states with about 57,000 employees.
The standard Dollar General store is 7,000 to 8,500 square feet. But Dollar General is testing a new format _ the Dollar General Market, which is about twice the size of a standard store and sells more food.
The company said it hopes to have 20 such stores by the end of the year. It is also adding more coolers, allowing it to sell more perishable items such as milk and meat.
"We have accomplished a great deal this year," Perdue said.
Also Thursday, Chief Financial Officer James J. Hagan said he plans to leave the company sometime next month.
On the Net:
Dollar General: http://www.dollargeneral.com/