Dollar General Corp ( DG ) shares are trading higher after the company reported a better-than-expected first-quarter FY24 earnings.

The company reported first-quarter FY24 sales growth of 6% year-on-year to $9.910 billion, beating the analyst consensus estimate of $9.897 billion.

Same-store sales increased 2.4% versus last year, driven by an increase in customer traffic, partially offset by a decrease in average transaction amount.

The gross profit margin for the quarter decreased 140 basis points Y/Y to 30.2%. The operating margin compressed from 7.93% to 5.51%, and operating income for the quarter declined 26.3% to $546.1 million.

The company held $720.7 million in cash and equivalents as of May 3, 2024. Operational cash flow increased 247.3%, totaling $663.8 million.

EPS of $1.65 beat the analyst consensus estimate of $1.56.

As of May 3, total merchandise inventories, at cost, were $6.9 billion compared to $7.3 billion as of May 5, 2023. 

The total remaining share authorization for future repurchases was $1.4 billion at the end of the first-quarter of 2024.

On May 28, 2024, the company's board declared a quarterly cash dividend of $0.59 per share on its common stock, payable on or before July 23, 2024 to shareholders of record on July 9, 2024. 

“These results were driven by strong customer traffic growth and market share gains during the quarter, which we believe is a testament to the relevance of our unique combination of value and convenience, as well as to improved execution across our organization," said CEO Todd Vasos.

Outlook: Dollar General ( DG ) reaffirmed FY24 sales growth outlook of 6% – 6.7% and same-store sales growth of 2.0% – 2.7%.

The company expects FY24 EPS of $6.80 – $7.55 versus an estimate of $7.25. Capital expenditure of $1.3 billion – $1.4 billion.

Dollar General ( DG ) expects to execute 2,435 real estate projects, including 730 new store openings, 1,620 remodels, and 85 store relocations in 2024.

Dollar General ( DG ) sees second-quarter sales growth in the low 2% range and EPS of $1.70 – $1.85 against an estimate of $1.92.

Price Action: DG shares are trading higher by 5.18% at $146.50 in premarket at last check Thursday.

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