Dollar General Profit Up on Food Sales

Source: Dollar General | Facebook

Dollar General said on Monday that its sales growth this year could surpass the strength it saw in 2012, as selling more food and other basics helps drive gains despite consumers' concerns about the economy.

Following the report, the company's stock ticked higher in premarket trade. (Click here to track the company's stock before the opening bell.)

Its fourth-quarter profit came in well ahead of analysts' expectations despite lighter-than-anticipated sales growth.

Dollar General, which prices most of its merchandise below $10, generally does well when economic concerns push those on limited budgets to cut spending. However, competitors led by Wal-Mart Stores' Walmart chain have stepped up their focus on items priced at $1 or less, putting some added pressure on the so-called dollar stores such as Dollar General. Those chains have responded by stepping up their advertising and starting to sell items such as cigarettes to bring shoppers into their stores more often.

Dollar General earned $317.4 million, or 97 cents per share, in the fourth quarter ended on Feb. 1, up from $292.5 million, or 85 cents per share, a year earlier.

Sales rose 0.5 percent to $4.21 billion.

Analysts, on average, expected Dollar General to earn 90 cents on $4.26 billion in sales, according to Thomson Reuters.

Sales at stores open at least a year, or same-store sales, rose 3 percent.

The same-store sales surpassed a 1 percent rise in such sales at Walmart U.S. in its fourth quarter, yet came in at the low end of Dollar General's forecast of 3 to 4 percent growth.

The sales gains at existing stores were helped primarily by consumables, or items such as food and household basics. More shoppers came into the stores and spent more on their purchases, the discount chain said.

Dollar General expects to earn $3.15 to $3.30 per share on an adjusted basis this year, with total sales up 10 percent to 12 percent and same-store sales up 4 percent to 6 percent.

Total sales rose 8.2 percent in 2012, or 10.4 percent excluding the impact of an extra week in 2011. Same-store sales rose 4.7 percent in 2012.