Annual same-store sales growth forecast increased to 2.5%-2.7%
Dollar stores gain from demand across income groups
Shares rise as much as 12.3%
Adds analyst comment in paragraph 5
By Anuja Bharat Mistry
Dec 4 (Reuters) - Dollar General DG.N raised its annual profit forecast after beating third-quarter earnings estimates on Thursday, as value-seeking shoppers across income levels flock to its stores amid economic uncertainty and the discount retailer reins in costs.
The company's shares rose as much as 12.3% to a 15-month high, set to add to their 45% gain this year.
"With our unique combination of value and convenience, we believe we are well-positioned to increase market share with customers across all income brackets," said CEO Todd Vasos during the post-earnings call.
Dollar General and rival Dollar Tree DLTR.O, which raised its annual profit forecast a day earlier, are benefiting from robust demand for everything from groceries to home goods across income groups, a trend highlighted by retail giant Walmart WMT.N.
"The discounters and dollar stores have performed well this year ... Everyone is seeking value in this environment," said Joseph Feldman, analyst with Telsey Advisory Group.
PRICING STRATEGY APPEALS TO CORE CUSTOMERS
Dollar General's focus on maintaining about 25% of its offerings at or below the $1 price point to resonate with its core customers - households earning less than $35,000 annually - has also made the company a go-to destination.
The company projected annual earnings per share in the range of $6.30 to $6.50, compared with its earlier target of $5.80 to $6.30.
It now expects annual same-store sales to grow between 2.5% and 2.7%, compared with its prior forecast of 2.1% to 2.6%.
Dollar General's back-to-basics focus is paying off, with comparable sales that are hovering around industry growth of 2.5% to 3%, said Michael Montani, analyst with Evercore ISI.
The retailer reported a profit of $1.28 per share for the quarter ended October 31, compared with analysts' estimates of 95 cents, according to data compiled by LSEG.
(Reporting by Anuja Bharat Mistry and Sanskriti Shekhar in Bengaluru; Editing by Sriraj Kalluvila)
((AnujaBharat.Mistry@thomsonreuters.com))
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