: Dollar General’s stock tumbles premarket after earnings miss and lowered guidance

Dollar General Corp.’s stock DG tumbled 13.7% in premarket trade Thursday, after the discount retailer posted weaker-than-expected second-quarter earnings and lowered its guidance. “While we are not satisfied with our overall financial results, we made significant progress in the second quarter improving execution in our supply chain and our stores, as well as reducing our inventory growth rate and further strengthening our price position,” said Jeff Owen, Dollar General’s chief executive officer, in a statement. The company had net income of $468.8 million, or $2.13 a share, for the quarter, down from $678.0 million, or $2.98 a share, in the year-earlier period. Sales rose to $9.796 billion from $9.426 billion. The FactSet consensus was for EPS of $2.47 and sales of $9.926 billion. Same-store sales fell 0.1% while FactSet was expecting a 0.9% rise. Owen said the company is making further investments to draw down inventory and drive growth and expect an operating profit headwind of up to $170 million in the second half from those investments. Dollar General lowered its guidance and said it now expects sales to be up 1.3% to 3.3%, compared with prior guidance of up 3.5% to 5.0%. It expects EPS of about $7.10 to $8.30, or a decline of 34% to 22%, compared with prior guidance for a decline of about 8% to flat growth. It expects same-store sales to be down about 1% to up about 1%, compared with prior guidance of growth of 1% to 2%. The stock has fallen 36% in the year to date, while the S&P 500 SPX has gained 17.6%.

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