Stock Market News: Dollar General Climbs, Kroger Falls on Earnings

Major benchmarks were somewhat turbulent on Thursday morning, initially climbing on increased optimism overall but slowly giving up ground as doubts about any potential trade deal once again crept into investors’ minds. As of 11:30 a.m. EST, the Dow Jones Industrial Average (DJINDICES: ^DJI) was down 32 points to 27,618. The S&P 500 (SNPINDEX: ^GSPC) fell 1 point to 3,112, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) dropped 4 points to 8,562.

Earnings season has largely run its course, but there are still a few well-known companies that gave their latest results this morning. Dollar General (NYSE: DG) gained ground on a solid report from the dollar store retailer, but grocery giant Kroger (NYSE: KR) faced some challenges that sent its stock price lower.

Dollar General rakes in the dollars

Shares of Dollar General were up 1% after the dollar store retailer announced its third-quarter financial results. Investors were pleased with the report and seemed to have high hopes for the company’s growth plans for 2020.

Image source: Dollar General.

Fundamentally, Dollar General performed well. Revenue increased almost 9% during the quarter on a 4.6% rise in same-store sales, and earnings per share were up almost 13% year over year. CEO Todd Vasos explained that Dollar General had its best customer traffic figures in nearly five years, which helped to drive same-store sales figures upward as well. The company also boosted its guidance for the remainder of the year, expecting stronger sales, comps, and earnings than previously projected.

Dollar General has ambitious plans for 2020 as well. The company expects 1,000 new store openings along with 1,500 remodeling projects on existing stores. Vasos believes there’s a big opportunity to expand Dollar General’s customer base by expanding the store network.

Many have feared that trade tensions would weigh on dollar store retailers, but Dollar General’s results seemed to allay those concerns. With a strategic vision that’s proven resilient to outside pressures, Dollar General appears to have more growth ahead of it.

Kroger deals with pressure

Shares of Kroger fell 4% following its release of third-quarter financials. Despite some solid numbers, investors were disappointed with the grocery giant’s efforts to maintain its leadership role in the industry.

Kroger’s financial performance was mixed. Identical-store sales rose 2.5% excluding fuel, with sales from its digital channel increasing 21% from prior-year levels. However, adjusted earnings per share were down from the year-earlier period and fell short of what most investors were hoping to see.

Kroger has worked hard to try to keep up with its peers in the grocery industry. The emphasis lately has been on driving customer traffic, and Kroger’s moves to encourage digital channels like pickup and delivery have taken a high priority as well. Yet the company’s move to divest its interest in specialty grocery chain Lucky’s Market resulted in an impairment charge and seemed to represent a setback in its strategic plans.

Going forward, the grocer’s Restock Kroger plan needs to have a greater influence on growth. Otherwise, further disappointments could lie ahead for Kroger and its shareholders.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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