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Dollar General Stock Slumps As Rising Costs Clip Q3 Earnings, 2022 Outlook

"We believe the majority of these and other gross margin pressures are largely temporary, and we are confident in our plans to drive greater supply chain efficiencies moving forward,' said CEO Jeff Owen.

Updated at 10:16 am EST

Dollar General  (DG) - Get Free Report shares slumped lower Thursday after the discount-focused retailer posted weaker-than-expected third quarter earnings, while cutting its full-year outlook, as transport costs and supply chain disruptions clipped profit margins. 

Dollar General said earnings for the three months ending on October 28 rose 12% from last year to to $2.33 per share, but came in well shy of the Street consensus forecast of $2.54 per share. Group revenues rose 11.5% to $9.5 billion, topping analyst's estimates, as same-store sales were up 6.8% compared to last year.

The group said cost pressures, while temporary, would likely extended into the final quarter of the year, and noted that while it sees same-store sales growth in the region of 6% to 7%, diluted earnings are expected between $3.15 and $3.30 per share, implying a growth rate of around 7.5%, well south of its prior 13% forecast.

“Despite the cost pressures we experienced during the quarter, as well as challenges within our internal supply chain resulting in higher-than-anticipated distribution and transportation costs, our team was resilient and worked hard to deliver double-digit diluted EPS growth," said CEO Jeff Owen. "We believe the majority of these and other gross margin pressures are largely temporary, and we are confident in our plans to drive greater supply chain efficiencies moving forward.”

“We continued to make progress on our strategic initiatives and operating priorities during the quarter, including executing nearly 800 real estate projects," he added. "We are excited about our plans to extend our ability to serve more customers, and believe we are well-positioned to continue delivering long-term sustainable growth and value for our shareholders.”

Dollar General shares were marked 9.5% lower in early Thursday trading to change hands at $231.11 each, a move that would erase all of the stock's year-to-date gains.