Dollar General Stock Rises After a Big Earnings Miss. What Has Wall Street Excited. — Barrons.com
Dollar General's stock rose 5.3% to $78.85 in premarket trading despite a significant earnings miss, with EPS dropping to 87 cents due to an impairment charge. The company reported a 4.5% increase in net sales to $10.3 billion, driven by higher customer spending. Dollar General plans to close 96 locations and convert some Popshelf stores to Dollar General. However, it provided a positive long-term profit outlook, expecting EPS growth of over 10% starting in 2026, which has excited Wall Street.
Karishma Vanjani
Dollar General shared a solid long-term profit outlook that overshadowed a mixed performance for its fiscal fourth quarter.
The discount retailer's earnings per share more than halved from a year ago to 87 cents in the fourth quarter, which ended in January. That drop includes an impairment charge of 81 cents from store closures. Net sales increased by 4.5% to $10.3 billion in the quarter, driven by higher spending by customers. Analysts were expecting $1.51 per share in earnings on $10.3 billion in sales, according to FactSet.
The company has more closures planned for the first quarter, saying it will shutter 96 Dollar General locations and 45 of its relatively higher-end Popshelf stores. It will also convert six Popshelf locations to Dollar General stores.
Popshelf stores from Dollar General mainly offer home décor, beauty, cleaning, and party supplies priced at $5 or less and are located in suburban communities.
The stock rose 5.3% to $78.85 in premarket trading.
The boost could be coming from Dollar General's forecast for long-term growth. The company expects earnings per share to grow more than 10% beginning in 2026. Wall Street had priced in 8.75% in year-over-year growth.
In December, Dollar General said it was targeting double-digit EPS growth but wasn't ready to commit to a timeline.
The Goodlettsville, Tenn.-based retailer had grown swiftly by opening more stores. Now it is trying to optimize that growth by closing non-performing stores. The number of closings represents less than 1% of its overall store count.
Barron's recommended buying the stock in an article published earlier this year.
Write to Karishma Vanjani at karishma.vanjani@dowjones.com
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