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GOODLETTSVILLE, Tenn. -- National discount store operator Dollar General Corp. yesterday reported a 27 percent drop in first-quarter profit, thanks to higher costs from terminating leases, closing stores, and its pending deal to become a private company.
The retailer reported net income of $34.9 million, or $0.11 per share, for the first quarter ended May 4, 2007, compared to net income of $47.7 million, or $0.15 per share, for the prior year first quarter.
Net sales were $2.28 billion, a 5.8 percent increase from fiscal 2006. The improved performance came primarily from a same-store sales increase of 2.4 percent and the opening of 104 net new stores since the end of the prior year first quarter. Net sales in the quarter were also aided by markdowns from retail taken in the 2007 first quarter and the 2006 fourth quarter, primarily in the seasonal, home, and apparel categories, in connection with the company's efforts to minimize the amount of inventory carried over from prior seasons and to allow for a greater mix of newer, fresher inventory going forward.
During the 2007 first quarter, the company opened 124 new stores, remodeled 25 stores, relocated 15 stores, and closed 171 stores, including 153 stores identified in fiscal 2006 as low-potential stores to be closed in connection with the company's strategic review.
As of May 4, 281 of the approximately 400 stores identified in this review have been closed. The majority of the remainder are expected to close in the company's 2007 fiscal second quarter.
Dollar General operates 8,182 neighborhood stores, including 57 grocery-centric Dollar General Markets.