NEW YORK (Reuters) - Dollar General Corp <DG.N> posted a higher-than-expected quarterly profit as it attracted bargain-seeking consumers who spent more per visit, and the discount retailer raised its profit outlook.
In a statement, Chief Executive Rick Dreiling said Dollar General's sales momentum continued to build as the quarter progressed and said he was "encouraged" with the current quarter's sales thus far.
The retailer said it saw the number of shoppers and average transaction amounts rise during the second quarter, which included July, when consumer sentiment hit a nine-month low.
Citing stubbornly high unemployment, Dollar General said it expects to win more shoppers this year.
Dollar General, which prices most of its merchandise below $10, raised its adjusted full year 2010 earnings forecast to a range of $1.68 to $1.74 per share, above Wall Street estimates of $1.72 per share. The company had previously said it expected
a profit between $1.62 to $1.69 per share.
Dollar General expects same-store sales, or sales at stores open at least a year, to be up by between 4 percent and 6 percent.
The company, based in Goodlettsville, Tennessee, said profit was $141.2 million, or 41 cents a share, in the second quarter ended July 30, up 50.9 percent from $93.6 million, or 29 cents a share, a year earlier.
Excluding one-time items, Dollar General reported a profit of 42 cents per share, beating analysts' average forecast of 38 cents , according to Thomson Reuters I/B/E/S.
Sales rose 11 percent to $3.21 billion, in line with analyst estimates. Same-store sales rose 5.1 percent.
The retailer, which is majority-owned by private equity firm Kohlberg Kravis Roberts & Co <KKR.UL>, benefited from efficiencies in how it sources the items it sells, helping lift gross profit margins by about 1 percentage point to 32.2 percent.
On a per-store basis, inventory was up 5 percent.
Dollar General said it was on track to open 600 new stores and remodel or relocate another 500 in 2010, and said it expects capital expenditures to reach $350 million for the year. Dollar General operates about 9,100 stores.
(Additional reporting by Brad Dorfman)
(Reporting by Phil Wahba; Editing by Derek Caney, Dave Zimmerman)