Dollar General beats, sees higher sales, profit

CHICAGO (Reuters) - Retailer Dollar General Corp reported a higher-than-expected quarterly profit and said this year's results would probably top analysts' forecasts, sending its shares up nearly 3 percent.

Dollar General, which prices most merchandise below $10, has benefited as lower-income consumers shifted away from pricier stores and even from discounters like Wal-Mart Stores Inc to save on basic goods like food.

Chief Executive Officer Rick Dreiling said winter storms had cut into some shopping in the latter half of the quarter. But more people visited its stores and spent more when they shopped.

Earnings benefited a bit from a lower-than-expected tax rate. While sales at stores open at least a year missed the company's expectations, they still surpassed strong year-earlier results.

"The headlines were very good," said Avondale Partners senior research analyst Mark Montagna. "When you dig in a little bit further, it's not as good, but it's still good."

Dollar General's fiscal-year forecast suggests sales and earnings could top Wall Street's expectations, even excluding the benefit of an extra week.

The company forecast earnings of $2.20 to $2.30 per share for the year ending on February 3, including about 6 cents from the extra week.

Analysts, who generally excluded the 53rd week, were expecting a profit of $2.14 per share.

Dollar General forecast sales would rise 11 percent to 13 percent, including about 2 percentage points from the extra week. The analysts' average forecast of nearly $14.26 billion compiled by Thomson Reuters I/B/E/S would be a 9.3 percent increase.

Sales at stores open at least a year should rise 3 percent to 5 percent based on a comparable 52-week period, the company said.

Shares of Dollar General were up 2.7 percent at $31.20 in morning trading.

SAME-STORE SALES MISS

Fourth-quarter sales rose 9.4 percent to $3.49 billion. Same-store sales rose 3.8 percent, missing the company's forecast of about 5 percent.

Same-store sales increased at their slowest pace of the year, following gains of 4.2 percent in the third quarter, 5.1 percent in the second and 6.7 percent in the first. They rose 7.4 percent in the year-earlier fourth quarter.

Dollar General, which is majority-owned by private equity firm Kohlberg Kravis Roberts & Co , earned $222.5 million, or 64 cents per share, in the fourth quarter ended on January 28, up from $87.2 million, or 26 cents per share, a year earlier.

Excluding certain items, Dollar General earned 65 cents per share, beating Wall Street forecasts of 59 cents.

The company cut adjusted selling, general and administrative costs to 20.6 percent of sales from 21.3 percent a year earlier.

Dollar General, which has more than 9,370 stores in 35 U.S. states, confirmed its intention to open 625 stores this year. It also plans to relocate about 550 stores.

(Reporting Jessica Wohl in Chicago and Phil Wahba in New York; Editing by Lisa Von Ahn and Derek Caney)

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