Dollar General profit beats on higher prices, lower transport costs

Dollar General's earnings better than expected

Discount retailer Dollar General reported a better-than-expected quarterly profit, helped by higher prices and lower transportation costs.

The company said on Tuesday that it sold more tobacco and health care products, perishable food items and candy and snacks in its consumables business in the first quarter.

Demand in the non-consumables business was driven by apparel and home products.

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Dollar General's shares rose about 4 percent in light premarket trading. (Get the latest quote here.)

The company is set to be dethroned as the top U.S. discount retailer by store count after it lost a takeover battle for smaller rival Family Dollar Stores to Dollar Tree this year.

The combined Family Dollar and Dollar Tree will have more than 13,000 stores. Dollar General had about 12,000 stores as of May 1.

Dollar General has said that it would speed up store openings this year.

The company said last week that Chief Executive Rick Dreiling would retire on Wednesday, seven and a half years after taking the helm, and Chief Operating Officer Todd Vasos would replace him.

Dollar General's net income rose to $253.2 million, or 84 cents per share, in the quarter ended May 1 from $222.4 million, or 72 cents per share, a year earlier.

Sales increased 8.8 percent to $4.92 billion.

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Analysts on average had expected a profit of 81 cents per share and sales of $4.94 billion, according to Thomson Reuters I/B/E/S.

Dollar General's same-store sales rose 3.7 percent, but fell short of the 4.1 percent growth analysts polled by research firm Consensus Metrix had expected.

Dollar General's shares were trading at $75.44 before the bell. Up to Monday's close, the stock had risen about 35 percent in the past 12 months.