GOODLETTSVILLE, Tenn. — Dollar General Corp. got off to a fast start in fiscal 2021, as top- and bottom-line results for the first quarter exceeded the expectations of both management and Wall Street.

Net income for the quarter ended April 30 increased 4.2% to $677.7 million, or $2.82 per diluted share, well ahead of the consensus estimate of $2.19 per share among analysts. Net sales edged downward 0.6% to $8.4 billion, reflecting a 4.6% drop in same-store sales and the impact of store closures. Analysts were looking for sales of $7.95 billion.

“Our first quarter results exceeded our expectations, reflecting strong underlying performance across the business, which we believe was enhanced by the most recent round of government stimulus payment,” said chief executive officer Todd Vasos. “The quarter was highlighted by net sales growth of 16% in our combined nonconsumable categories, a 208-basis-point increase in gross margin rate and double-digit growth in diluted earnings per share. Despite what continues to be a challenging operating environment, we are increasing our sales and diluted EPS guidance for fiscal 2021 to reflect our strong first quarter performance.”

The decrease in same-store results was driven by a drop in customer traffic that was partially offset by a higher average transaction. Same-store sales of consumables, which account for more than 75% of the top line, fell during the quarter, but, as Vasos noted, key nonconsumable categories of apparel, seasonal and home products all registered growth.

Moreover, the same-store sales decline reflects a comparison to last year’s 21.7% surge in the wake of the COVID-19 pandemic. On a two-year stacked basis that combines the figures for both quarters, same-store sales leapt 17.1%.

The strong performance of the higher-margin nonconsumable categories was reflected in gross margin, which expanded 208 basis points to 32.8%. The company attributes the margin growth to higher initial markups on purchased inventory; a reduction in markdowns as a percentage of net sales; a higher proportion of sales generated by nonconsumables, which generally carry a higher gross profit rate than consumables; and a reduction in inventory shrink. Those positive factors were partially offset by higher transportation costs.

Selling, general and administrative (SG&A) expense, meanwhile, swelled 152 basis points to 21.98% of sales. Factors driving the higher expense ratio included higher store occupancy costs; disaster expenses related to winter storm Uri; retail labor costs; depreciation and amortization; administrative compensation; utilities; and taxes and licenses.

Operating profit consequently gained 4.9% to $908.9 million. With interest expense vaulting 32.4% to $40.4 million, pretax income improved 3.8% to $868.5 million.

As Vasos remarked, based on the first quarter performance, Dollar General is raising its guidance for fiscal 2021. The company now expects to achieve the following:

• Net sales ranging between a 1% increase and a 1% decrease. Prior guidance ranged from a 2% decline to flat.

• Same-store sales down 5% to 3%, reflecting growth of 11% to 13% on a two-year stack basis. The original projection called for a decline of 4% to 6%.

• Diluted earnings per share in the range of $9.50 to $10.20, up from previous guidance of $8.80 to $9.50 per share.

• Share repurchases totaling about $2.2 billion, up from an original prediction of approximately $1.8 billion.