money Dollar General smashes expectations, sales soar
Yahoo Finance's Brian Sozzi, Alexis Christoforous, and Ines Ferre break down the market action for Dollar General.
Video Transcript
BRIAN SOZZI: Look to the Yahoo Finance trending ticker, and that is Dollar General is in the spotlight after a pretty strong quarter. They reported this morning. Let's get right to us Ines Ferré. Ines, I've not seen a quarter like this before. Some of these sales gains were completely off the charts.
INES FERRE: Very strong sales gains, Brian. And this is because of COVID-19. The company says that its sales were positively impacted due to the pandemic. Its net sales increased 27.6%. Same-store sales increased by nearly 22%. It was driven primarily by an increase in average transaction amount and also customer traffic.
The largest percentage increase was in home products category. Adjusted earnings jumped to 73% to $2.56 a share. Its gross profit rate increased slightly because of less markdowns. And the board of directors declared a quarterly dividend of 36 cents a share. It also suspended its share buybacks earlier this year but intends to resume its buyback program as early, perhaps, as a second-quarter fiscal 2020.
Right now, the stock has jumped around quite a bit between green and red territory. It's down about 9/10 of a percent. But just take a look at the action over the last couple of months. A two-month chart, up more than 26%. Year to date, this stock is up 19%. Brian, Alexis.
BRIAN SOZZI: Yeah, Ines, you see a quarter like this from Dollar General, and you really have to wonder about the pace of the economic recovery. A lot of people are clearly struggling if they're going to Dollar General, even Dollar Tree. Dollar Tree, strong quarter for them too.
INES FERRE: That's right. Customers looking for those values.
ALEXIS CHRISTOFOROUS: And you know what, guys? I'm just going to jump in here because something else I'm noticing is that Dollar General is a lot of places where Walmart and Target are not. I mean, I think they've sort of got the-- they have the rural audience. They've got the suburban audience. They're looking at real estate in areas where Walmart and Target are not the leaders. And I think that that bet has paid off for them, clearly, in this latest quarter.
INES FERRE: That's right. Especially with the increase in traffic that they saw and also in the increase in amount of purchases. So the ticket-- the final tickets being higher.
BRIAN SOZZI: I'll just say this, too, real quickly, anecdotally, there is a Dollar General-- Dollar Tree, I'm sorry, outside of my house and the line's there every day for the past 2 and 1/2 months have been strong, which really, like I mentioned, says a lot about the state of the economy, that much for sure.
