By Ashesha Mehrotra

Variety store chain Dollar General Corp.’s stock surged 10.6 percent after the company reported higher earnings based on rising sales of such items as candy and snacks, tobacco and perishables.

In the quarter ended Jan. 29, the Tennessee-based company’s net income rose to $376.2 million, or $1.30 per diluted share, from $355.4 million, or $1.17 per share, in the January quarter last year, surpassing the analysts’ estimate of $1.26.

Excluding non-operating items, the company said, adjusted earnings were $1.1 billion, or $3.96 a share, versus $ 1.06 billion, or $ 3.50, in the year-ago quarter.

The company reported a same-store sales increase of 2.2 percent, resulting from rise in both customer traffic and average transaction amount. Additionally, the comparable sales, or sales at stores open at least 12 months, were driven by strength in both consumables (candy and snacks, tobacco and perishables) and non-consumable category(seasonal and home), offset by a modest decline in apparel.

For the fiscal year, net income was $1.16 billion or $3.95 per diluted share, a significant increase from $1.06 billion, or $3.49 per share in the previous year. Sales were $20.6 billion, up from $18.9 billion.

Dollar General Share Price 2015-2016

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Todd Vasos, Dollar General’s chief executive officer, said in a statement, “For the 26th consecutive year, we delivered positive same-store sales growth. In the fourth quarter, we effectively balanced sales and operating profit through our toughest quarterly comparison of the year to deliver.”

Analysts predict a further rise in same-store sales in the fiscal year  ending Feb. 3, 2017.

Ken Perkins, an analyst at Morningstar, wrote in his note, “In addition to store growth, category expansions should help to drive incremental purchases and market share gains over the medium term.”

Last year Dollar General opened 730 new outlets and remodeled and/or relocated 881 outlets. In the current fiscal year the company plans to open about 900 new stores and relocate or remodel around 875 stores.

In New York Stock Exchange trading Thursday, Dollar General shares closed at $83.21, up $8 or 10.6 percent.