Dollar General forecast 2019 profit below analysts’ expectations on Thursday as the discount retailer ramps up spending on stores to pull in more customers, sending its shares down nearly 6 percent.
Dollar General has spent the last year remodeling stores, adding more refrigeration units and shortening queues at payment counters.
The company said in 2019 it would spend about $50 million to improve distribution of fresh and frozen food, shopping convenience and labor productivity.
The company said it expects fiscal 2019 earnings of $6.30 to $6.50 per share, below the average analyst estimate of $6.65, according to IBES data from Refinitiv.
Excluding items, the company earned $1.84 per share in the fourth quarter ended Feb. 1 but missed the average analyst estimate of $1.88.
However, the company’s fourth-quarter same-store sales rose 4 percent and beat the 2.6 percent increase analysts had estimated, as its customers, who benefited from an earlier-than-usual issue of food stamps, spent more on groceries.
Net sales rose 8.5 percent to $6.65 billion and beat analysts’ expectations of $6.61 billion.
Shares were trading down at $113.98 before the opening bell, despite the company raising its quarterly dividend by 10 percent and increasing its share buyback program by $1 billion.