What happened

Shares of Dollar General Corp (NYSE:DG) were down 5.3% as of 1:06 p.m. EDT Thursday after the discount retailer announced mixed second-quarter 2017 results and weaker-than-expected full-year earnings guidance.

That's not to say Dollar General's results looked bad on the surface. Quarterly revenue climbed 8.1% year over year to $5.83 billion, including a 2.6% increase in same-store sales. On the bottom line, that translated to net income of $295 million, or $1.08 per diluted share, compared with $307 million, or $1.08 per share in the same year-ago period. Analysts, on average, were expecting slightly higher earnings of $1.09 per share on slightly lower revenue of $5.80 billion.

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So what

To be fair, note this year's earnings included a $0.02-per-share charge related to Dollar General's June acquisition of 285 new store locations in 35 states from a small-box multiprice-point retailer. The company plans to convert those stores to Dollar General locations by the end of November.

CEO Todd Vasos remained optimistic, stating:

I am pleased with our results at this point in the year. For the quarter, same-store sales grew 2.6%, driven by an increase in our average transaction amount and, importantly, positive customer traffic. In a dynamic retail and consumer landscape, we continue to make targeted investments in our business to execute on our focused strategic and operating initiatives which we believe will contribute to sustainable improvement over time.

Now what

Dollar General reiterated its full fiscal 2017 outlook for sales to increase by 5% to 7%, but now assumes a change in same-store sales at the high end of its previous guidance for growth ranging from slightly positive to 2%. Dollar General also increased the lower end of its full-year earnings guidance by $0.10 per share, resulting in a new expected 2017 EPS range of $4.35 to $4.50. Even so, analysts' consensus estimates were already modeling full-year earnings of $4.51 per share.

This certainly wasn't a bad quarter from Dollar General, but it's obvious the market was hoping for more even as the company continues to outperform its peers in today's challenging retail environment. 

Steve Symington 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.