Increases come despite traffic declines due to weather

GOODLETTSVILLE, Tenn. — Dollar General Corp. said Thursday that revenue jumped 30.5% to $6.1 billion in its first quarter as net sales increased 9%. Comparable-store sales rose 2.1% in the 13 weeks to May 4.

First-quarter net income rose 9% to $365 million, or $1.36 per share.

Dollar General reiterated its forecast for full-year earnings of between $5.95 and $6.15 per share. The company expects net sales to increase about 9% in fiscal 2018, with same-store sales growth estimated to be in the mid-2% range.

The retailer is managing to deliver growth and expand gross margins as management continues to execute a cost-containment strategy, said Todd Vasos, Dollar General’s chief investment officer.

“We are proud of our execution and solid performance, particularly given the significant weather-related headwind we faced during the first quarter. We are pleased with the start of the second quarter, and based on our year-to-date performance and outlook for the remainder of 2018, we are reiterating our full-year guidance,” Vasos said in a statement. “We offer a unique value and convenience proposition that continues to resonate with customers, and we are excited about the initiatives we have in place.”

Shoppers’ average transaction amount increased in the first quarter, but the contribution to same-store sales growth was limited by a decline in customer traffic due to unseasonably cold and damp weather, Dollar General said. Robust sales of consumables drove much of the comparable-store gains; sales languished in the apparel, seasonal and home categories.

The Tax Cuts and Jobs Act passed by Congress in December lowered Dollar General’s effective income tax rate in the first quarter to 21.6% from 37.2% in the first quarter of 2017, the company said. Dollar General anticipates a cash benefit of $300 million in fiscal 2018 as a result of the corporate tax cut.

Share repurchases for fiscal year 2018 are expected to be approximately $850 million, the company said.

Dollar General repurchased 1.6 million shares in the first quarter, part of a share-repurchase program begun in 2011. Since then, Dollar General has repurchased 83 million shares of its common stock at a cost of $5.3 billion.

Dollar General said it opened 241 new stores, remodeled 322 stores and relocated 31 stores in the first quarter. The company earlier announced plans for 900 new stores and 1,000 remodels this year.

The remodels allow stores to carry more perishables, including fresh produce. Upgrades to its snack and beverage aisles aim to capitalize on consumer demand for more healthy options. Dollar General operates in mostly rural communities where it’s one of the few, if not the only, food retailer around. The company has been experimenting with a smaller store format, dubbed DGX, catering to shoppers in more densely populated locales.