Dollar General Shares Down 4% Since Reporting a Q4 Miss

Dollar General (NYSE:DG) shares fell more than 4% since the company’s reported Q4 results on Thursday, with EPS of $2.96 coming in worse than the Street estimate of $2.99. Revenue was $10.2 billion, missing the Street estimate of $10.25 billion.

For fiscal 2023, the company expects net sales growth to be in the range of 5.5%-6% and same-store sales (SSS) growth in the range of 3.0%-3.5%.

According to the analysts at Deutsche Bank, there were few surprises from the earnings release given the Feb 23 pre-announcement with Q4 EPS coming in at the high end of guidance and 2023 SSS and EPS growth reiterated.

That said, 2023 appears to be much more back-end loaded than what the market was anticipating, and the decline in planned buyback activity ($500 million vs. $2.6 billion three-year average) seems to reflect, in part, elevated capital spending.

In addition, investors will likely focus on the continued gross margin pressure, stemming from a higher degree of damages/supply-chain costs that are carrying into Q1, as well as ongoing product mix headwinds and higher shrink.