(Reuters) - Discount retailer Dollar General Corp (N:DG) reported a higher-than-expected growth in quarterly sales at established stores as demand increased for items such as candy and snacks, perishables, tobacco and food.
Low gas prices and improving wage growth are supporting a recovery in spending by low-income Americans, Dollar General's main customer group.
The company's shares rose about 5 percent to $78.86 in light premarket trading on Thursday.
Sales at Dollar General stores open at least 13 months rose 2.2 percent in the fourth quarter, helped by increased customer traffic and bigger transaction sizes. Analysts on average had expected a growth of 1.9 percent, according to research firm Consensus Metrix.
"Growth in the non-consumable category was broad-based, with notable strength across seasonal and home, offset by a modest decline in apparel," the company said.
Dollar General's net income rose about 6 percent to $376.2 million, or $1.30 per share, in the quarter ended Jan. 29.
Net sales increased 7 percent to $5.29 billion.
Analysts on average had expected earnings of $1.26 per share and revenue of $5.30 billion, according to Thomson Reuters I/B/E/S.
Dollar General also said it planned to buy back about $1 billion in shares in fiscal 2016.
(This story has been refiled to correct typo in paragraph 1)