Dollar General’s financial results fell below its expectations during the fourth quarter and fiscal year, the discounter announced Thursday.
The Goodlettsville, Tennessee-based retailer, which has been steadily ramping up its grocery sales in recent years, reported that same-store sales for the quarter ended Feb. 3 increased 5.7%, down from an anticipated 6% to 7% increase, according to preliminary financial results. For the fiscal year, same-store sales rose 4.3%, compared with the previous forecast of being in the upper end of the 4% to 4.5% range.
Dollar General said it expects diluted earnings-per-share growth for the year in the range of 4.5% to 5%, compared with earlier expectations of 7% to 8%.
Lower-than-anticipated sales, coupled with higher-than-expected inventory damages, were cited as reasons for the financial shortfall.
Dollar General’s stock dipped about 4.6% by mid-day Thursday, to $214.97 a share, on the news—a year-to-date low.
The retailer, which recently opened its 19,000th location, said its bottom line was hit by the effects of Winter Storm Elliott, a cross-country storm that impacted much of the country in December. Same-store sales for that month were lower than anticipated, at 4.5%, while same-store sales for November and January were 6.7% and 6.5%, respectively, the company said.
For fiscal 2023, which ends on Feb. 2, 2024, Dollar General said it expects same-store sales growth in the range of 3% to 3.5%, with diluted earnings-per-share growth in the range of 4% to 6%. Higher interest expense during the year, and lapping the fiscal 2022 53rd week, are to blame for the negative financial impacts, Dollar General said.
Dollar General will report its official fourth-quarter and full-year earnings on March 16.
Dollar General has been swiftly opening new stores, at the pace of about 1,000 locations per year, since 2012. The retailer, which was founded as a wholesaler in 1939, opened its first retail store in 1955 in Springfield, Kentucky.
The company did not break down its earnings by category in the preliminary results released Thursday. In December, however, Dollar General reported that food-and-beverage sales grew 12%, far outpacing same-store sales growth of 6.8% during the period.
Dollar General now sells fresh produce in more than 3,000 locations and plans to add fruit and vegetables to about 2,000 more stores this year. The retailer debuted its DG Fresh initiative in 2021, with the goal of reducing costs by owning the distribution channels of fresh and frozen goods.
On Tuesday, Dollar General announced it had partnered with food magazine Delish and registered dietician-nutritionist Mary Alice Cain to create recipes for breakfast, lunch and dinner that include ingredients found at Dollar General stores.
The retailer said it was part of its effort to “increase affordable access to food through new stores and product availability” and noted that roughly 75% of the U.S. population lives within five miles of a Dollar General location.