Dollar General Shares Plunge 32% on Q2 Earnings Miss & Guidance Cut

Dollar General (NYSE:DG) shares plummeted over 32% yesterday after the discount retailer reported second-quarter earnings and revenue that missed street expectations and issued a sharp cut to its full-year guidance.

For the second quarter, Dollar General posted earnings per share of $1.70, falling short of the $1.80 Street estimate. Revenue reached $10.21 billion, below the expected $10.38 billion, though it marked a 4.2% increase year-over-year. Same-store sales saw a slight increase of 0.5% compared to the same period last year.

In response to the disappointing quarter, Dollar General significantly lowered its full-year earnings forecast, now projecting EPS between $5.50 and $6.20, a substantial reduction from its previous guidance of $6.80 to $7.55 and well below the $7.12 Street consensus. The company also revised its net sales growth forecast to a range of 4.7%-5.3%, down from the earlier projection of 6.0%-6.7%.

The company's gross profit margin decreased by 112 basis points to 30.0%, driven by higher markdowns, inventory damages, and shrinkage. Operating profit dropped 20.6% to $550.0 million compared to the same quarter last year.

Despite these setbacks, Dollar General is moving forward with plans to open 730 new stores and remodel 1,620 existing locations this fiscal year. The company also announced a quarterly cash dividend of $0.59 per share.