By Dhirendra Tripathi
Investing.com – Dollar General (NYSE:DG) stock jumped 3% in premarket Thursday after the discount chain issued a strong forecast for 2022, led by hopes that inflation will drive bargain-hunting consumers to its stores.
Adding to the gains in the stock is a 31% higher quarterly dividend.
Dollar General is also opening more pOpshelf stores aimed at wealthier customers who enjoy a treasure-hunting experience. It is maintaining its pricing even as rival Dollar Tree (NASDAQ:DLTR) recently completed its exercise of putting most of its products under the $1.25 price point, junking the 35-year practice of charging $1 for a majority of items.
Dollar General expects 2022 net sales to rise about 10% while it targets 1,110 new store openings in the year. The forecast is a sharp jump after net sales rose 1.4% in the year ended January 28. It also compares favorably with rival Dollar Tree’s forecast of a less than 6% growth. Dollar General’s profit per share is seen rising 12-14% on a diluted basis for the year.
The company’s same-store sales fell during the quarter as well as in the year as customer traffic fell, going through upheavals due to the virus.
Fourth quarter net sales rose 2.8% to $8.7 billion, mainly due to new stores. They were lower than estimates; thanks to same-store sales falling 1.4%, driven by a decline in customer traffic but partially offset by an increase in average transaction amount.
Same-store sales declined in each of the apparel, consumables, seasonal, and home products categories.
Diluted earnings per share fell 2% to $2.57, but ahead of estimates.