(Reuters) - Dollar General Corp (DG.N) on Thursday reported better-than-expected same-store sales and profit for the third quarter, as hurricanes led to more traffic and higher spending at its stores.
Sales at stores open for at least a year rose 4.3 percent, beating the average analysts’ estimate of 2.8 percent growth, according to Thomson Reuters I/B/E/S.
The retailer said Hurricanes Harvey and Irma contributed 30-35 basis points to comparable sales growth, while hurting profit by 5 cents per share in the quarter.
The company has the highest concentration of its more than 14,300 stores in Texas, which was hit hard by Hurricane Harvey. Florida, with almost 800 stores as of last year, was battered by Irma.
The retailer is the closest and most convenient general merchant for millions, especially those living in rural areas, GlobalData Retail’s Neil Saunders said.
This likely helped the company net more sales ahead of the disasters, when people stocked up on emergency supplies like flashlights, drinking water and food.
The retailer’s shares, which have gained about 23 percent this year, were up 3 percent at $93.51 on Thursday.
Except for the previous quarter, traffic at Dollar General stores declined over the last year, partly due to reduced food stamp coverage in several U.S. states.
“The combination of low prices, broad assortment, and convenience will allow Dollar General to continue to grow as the income demographic primarily shopping at the stores has a limited amount of dollars to spend per visit,” Moody’s Vice President Mickey Chadha said.
Net income rose to $252.5 million, or 93 cents per share, in the third quarter ended Nov. 3, from $235.3 million, or 84 cents per share, a year earlier.
Excluding items, earnings were 98 cents per share, beating the average analysts’ estimate of 94 cents.
Net sales rose 11 percent to $5.90 billion, beating estimates of $5.80 billion.
The company also raised its comparable sales forecast for the fiscal year ending Feb. 2, while tightening its profit forecast range.
Dollar General said it now expects comparable sales to grow 2.5 percent, up from its previous forecast of up to 2 percent growth.
The company also tightened its profit forecast to $4.37 to $4.47 per share, compared to a previous $4.35 to $4.50.
Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Shounak Dasgupta, Bernard Orr