Executives now expect net sales to grow about 8% in the year ending January, at the low end of the earlier growth forecast of between 8% and 9%. The company now forecasts full-year comparable-store sales growth of between 2.5% and 2.8%, down from the earlier range of between 3% and 3.5%. And it is now forecasting adjusted earnings of between $3.88 and $3.93 a share, down from the earlier estimate of between $3.85 and $3.95 a share.
Gross profit, as a percentage of net sales, was 30.3% in the three months through October 30, an increase of 19 basis points from a year ago. This year’s third quarter ended before Halloween day. The prior-year period included Halloween day.
“The Dollar General team executed well in a retail environment very similar to the second quarter,” remarked Todd Vasos, the company’s chief executive officer. “Our initiatives are showing success relative to our long-term goals as we continued to deliver profitable sales growth coupled with disciplined cost management.”
Vasos noted that Dollar General will adopt “zero-based budgeting” in 2016, a budgeting strategy in which all expenses for the upcoming period must be justified, starting from a “zero base” and built around what is needed, regardless of whether the allocation is higher or lower than in the previous budget.
“As we plan for 2016, we are adopting a zero-based budgeting process to reinforce our commitment as a low cost operator to better serve our consumers with the everyday-low prices they know and trust at Dollar General,” Vasos said. “Looking forward, we have continued confidence that we are well positioned for sustainable growth and creation of shareholder value. As evidenced by today’s announcement of the increased share repurchase authorization, we remain committed to our balanced approach to capital allocation for our shareholders.”
Dollar General on Thursday also named John Garratt as its permanent chief financial officer, removing the interim tag. And it said it had repurchased 3.8 million shares of its common stock in the third quarter, bringing the total shares repurchased this year to 13.4 million. Dollar General also announced it had authorized the allocation of an additional $1 billion to share buybacks, including the total authorization for future repurchases of $1.2 billion. The authorization has no expiration date.
Dollar General ended its most recent quarter with 12,396 stores in 43 states, up from 10,506 stores at the end of the previous year. In the fiscal year to date, Dollar General has opened 634 new stores and remodeled or relocated 857 stores.