Mixed Results And A Poor Profit Outlook For Dollar General. Interest Rates Are To Blame.

After feeling the impact of higher interest rates on its quarterly results and profit forecast, Dollar General announced mixed quarterly results.

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According to the company's earnings statement for the fourth quarter that ended Feb. 3, the company earned $2.96 per share. As tracked by FactSet, analysts expected the company to earn $2.95 per share. It's expected that Net sales will rise by 10.24 billion and reach $10.20 billion in the quarter, but they were slightly lower at $10.20 billion.  

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Earnings per share are expected to increase by 4% to 6% for the company's fiscal year 2023, which would translate into a profit of $10.58 to $10.78 per share. In the analyst consensus, $11.29 was expected.

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DG -1.20% said in its earnings report that fiscal 2023 borrowing costs will have a negative impact on profit growth by about three percentage points.

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In premarket trading on Thursday, the stock tumbled nearly 2% to $215.00.

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In order to increase sales momentum, capture market share, and enhance the shopping experience for customers, the company will invest an additional $100 million in its stores, mainly for labor. Also planned for this year are 1,050 new Dollar General stores.

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Throughout economic cycles, consumers have been flocking to discount stores because of inflation. Due to that, the stock gained 1% in 2022, compared to a loss of nearly 20% for the S&P 500.

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Dollar General is a good stock to own in the current market environment, according to Jefferies analyst Corey Tarlowe. As a result, he expects the stock price to rise by 31% from its current level to $285 by the end of 2019.

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A 59-cent increase was also announced in dividends from 55 cents a share.