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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Dollar General Corporation | NYSE:DG | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
5.53 | 3.92% | 146.59 | 147.865 | 144.8286 | 145.28 | 3,270,034 | 00:59:37 |
Provides Financial Guidance for Fiscal 2024 First Quarter and Full Year
Dollar General Corporation (NYSE: DG) today reported financial results for its fiscal year 2023 fourth quarter (13 weeks) and fiscal year (52 weeks) ended February 2, 2024 (“fiscal 2023”).
Note: Dollar General's results for the fiscal full year and fourth quarter ended February 3, 2023 (“fiscal 2022”) contain an additional, non-comparable week, or the "53rd week”, when compared to the full year and fourth quarter results for the respective 52- and 13-week periods ended February 2, 2024. By definition, the Company's same-store sales growth calculations do not include the non-comparable 53rd week in the fiscal 2022 periods. Financial metrics discussed in this release, such as net sales, operating income, net income and earnings per share (“EPS”), are calculated in accordance with generally accepted accounting principles (“GAAP”) and therefore include the 53rd week for the applicable fiscal 2022 periods.
“We were pleased to deliver fourth quarter top and bottom-line results at the upper end of our internal expectations,” said Todd Vasos, Dollar General’s chief executive officer. “With customer traffic growth and market share gains during the quarter, we believe our actions are resonating with customers as they turn to Dollar General for our unique combination of value and convenience.”
“We have made solid progress executing on our Back to Basics strategy, which we believe supported our improved operational performance during the quarter. While we are pleased with the operational improvement we have seen, we believe that significant opportunity remains, as we continue to focus on enhancing the way we support our teams and serve our customers.”
“I want to thank our associates for their resilience and commitment to serving our customers every day. Looking ahead, we are excited about our plans for 2024 and are confident that we are taking the right actions to further solidify our foundation for future growth and create sustainable long-term value for our shareholders.”
Fourth Quarter Fiscal 2023 Highlights Net sales decreased 3.4% to $9.9 billion in the fourth quarter of fiscal 2023 compared to $10.2 billion in the fourth quarter of fiscal 2022, which included net sales for the 53rd week of $678.1 million. The net sales decrease was primarily driven by the period containing one less week of sales than the prior year period, as well as the impact of store closures; partially offset by positive sales contributions from new stores and growth in same-store sales. Same-store sales increased 0.7% compared to the fourth quarter of fiscal 2022, driven by an increase in customer traffic, partially offset by a decrease in average transaction amount. Same-store sales in the fourth quarter of fiscal 2023 included growth in the consumables category, partially offset by declines in each of the home products, seasonal, and apparel categories.
Gross profit as a percentage of net sales was 29.5% in the fourth quarter of fiscal 2023 compared to 30.9% in the fourth quarter of fiscal 2022, a decrease of 138 basis points. This gross profit rate decrease was primarily attributable to increased shrink and inventory markdowns, lower inventory markups, and a greater proportion of sales coming from the consumables category, which generally has a lower gross profit rate than other product categories. These factors were partially offset by a lower LIFO provision and decreased transportation costs.
Selling, general and administrative expenses (“SG&A”) as a percentage of net sales were 23.6% in the fourth quarter of fiscal 2023 compared to 21.7% in the fourth quarter of fiscal 2022, an increase of 189 basis points. The primary expenses that were a greater percentage of net sales in the current year period were retail labor, store occupancy costs, depreciation and amortization, repairs and maintenance, and other services purchased, including debit and credit card transaction fees. These factors were partially offset by a decrease in incentive compensation.
Operating profit for the fourth quarter of fiscal 2023 decreased 37.9% to $579.7 million compared to $933.2 million in the fourth quarter of fiscal 2022.
Interest expense for the fourth quarter of fiscal 2023 increased 3.1% to $77.1 million compared to $74.8 million in the fourth quarter of fiscal 2022.
The effective income tax rate in the fourth quarter of fiscal 2023 was 20.0% compared to 23.2% in the fourth quarter of fiscal 2022. This lower effective income tax rate was primarily due to the effect of certain rate-impacting items (such as federal tax credits) on lower earnings before taxes, and a lower state effective rate resulting from increased recognition of state tax credits.
The Company reported net income of $401.8 million for the fourth quarter of fiscal 2023, a decrease of 39.0% compared to $659.1 million in the fourth quarter of fiscal 2022. Diluted EPS decreased 38.2% to $1.83 for the fourth quarter of fiscal 2023 compared to diluted EPS of $2.96 in the fourth quarter of fiscal 2022.
Fiscal Year 2023 Highlights Fiscal 2023 net sales increased 2.2% to $38.7 billion compared to $37.8 billion in fiscal 2022, which included net sales for the 53rd week of $678.1 million. The net sales increase was primarily driven by positive sales contributions from new stores and growth in same-store sales, partially offset by the impact of store closures. Same-store sales increased 0.2% compared to fiscal 2022, driven by an increase in customer traffic, partially offset by a decline in average transaction amount. Same-store sales increased in the consumables category, and declined in the home products, seasonal and apparel categories.
Gross profit as a percentage of net sales was 30.3% in fiscal 2023, compared to 31.2% in fiscal 2022, a decrease of 94 basis points. The gross profit rate decrease in 2023 was primarily driven by increased shrink and inventory markdowns, lower inventory markups, a greater proportion of sales coming from the lower margin consumables sales category, and increased damages. These factors were partially offset by a lower LIFO provision and decreased transportation costs.
SG&A as a percentage of net sales was 24.0% in fiscal 2023 compared to 22.4% in fiscal 2022, an increase of 153 basis points. The primary expenses that were a higher percentage of net sales in the current year were retail labor, store occupancy costs, depreciation and amortization, repairs and maintenance, and other services purchased, including debit and credit card transaction fees. These factors were partially offset by a decrease in incentive compensation.
Operating profit for fiscal 2023 decreased 26.5% to $2.4 billion compared to $3.3 billion in fiscal 2022.
Interest expense for fiscal 2023 increased 54.7% to $327 million compared to $211 million in fiscal 2022, primarily driven by higher average borrowings and higher interest rates.
The effective income tax rate in fiscal 2023 was 21.6% compared to 22.5% in fiscal 2022. This lower effective income tax rate was primarily due to the effect of certain rate-impacting items (such as federal tax credits) on lower earnings before taxes, and a lower state effective rate resulting from increased recognition of state tax credits compared to fiscal 2022.
The Company reported net income of $1.7 billion for fiscal 2023, a decrease of 31.2% compared to $2.4 billion in fiscal 2022. Diluted EPS decreased 29.3% to $7.55 for fiscal 2023 compared to diluted EPS of $10.68 in fiscal year 2022. The decrease in diluted EPS includes estimated negative impacts of approximately four percentage points due to lapping the fiscal 2022 53rd week, and approximately four percentage points due to higher interest expense in fiscal 2023.
Merchandise Inventories As of February 2, 2024, total merchandise inventories, at cost, were $7.0 billion compared to $6.8 billion as of February 3, 2023, a decrease of 1.1% on a per-store basis.
Capital Expenditures Total additions to property and equipment in fiscal 2023 were $1.7 billion, including approximately: $683 million for improvements, upgrades, remodels and relocations of existing stores; $542 million for distribution and transportation-related projects; $390 million related to store facilities, primarily for leasehold improvements, fixtures and equipment in new stores; and $67 million for information systems upgrades and technology-related projects. During fiscal year 2023, the Company opened 987 new stores, remodeled 2,007 stores, and relocated 129 stores.
Share Repurchases In fiscal 2023, as planned, the Company did not repurchase any shares under its share repurchase program. The total remaining authorization for future repurchases was $1.4 billion at the end of fiscal 2023.
Under the authorization, repurchases may be made from time to time in open market transactions, including pursuant to trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, or in privately negotiated transactions. The timing, manner and number of shares repurchased will depend on a variety of factors, including price, market conditions, compliance with the covenants and restrictions under the Company’s debt agreements, cash requirements, excess debt capacity, results of operations, financial condition and other factors. The authorization has no expiration date. See also “Fiscal Year 2024 Financial Guidance and Store Growth Outlook.”
Dividend On March 13, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.59 per share on the Company’s common stock, payable on or before April 23, 2024 to shareholders of record on April 9, 2024. While the Board of Directors currently intends to continue regular cash dividends, the declaration and amount of future dividends are subject to the sole discretion of the Board and will depend upon, among other things, the Company’s results of operations, cash requirements, financial condition, contractual restrictions, excess debt capacity, and other factors the Board may deem relevant in its sole discretion.
Fiscal Year 2024 Financial Guidance and Store Growth Outlook For the 52-week fiscal year ending January 31, 2025 (“fiscal year 2024”), the Company expects the following:
The Company is also reiterating its plans to execute approximately 2,385 real estate projects in fiscal year 2024, including approximately 800 new store openings, 1,500 remodels, and 85 store relocations.
The Company’s guidance assumes no share repurchases in fiscal year 2024.
Fiscal Year 2024 First Quarter Financial Guidance For the 13-week quarter ending May 3, 2024, the Company currently expects a same-store sales increase of 1.5% to 2.0%, and Diluted EPS in the range of $1.50 to $1.60.
“We are encouraged by the progress we are making with our efforts in getting Back to the Basics, and we anticipate the benefit of these actions will continue to grow as we move throughout fiscal year 2024,” said Kelly Dilts, Dollar General’s chief financial officer. “While we anticipate the first quarter will be pressured by our lowest expected same-store-sales increase of any quarter in fiscal 2024, as well as the annualization of prior year headwinds such as retail labor and shrink, we are focused on delivering our full year plans, including anticipated strong EPS growth in the back half of the year.”
Conference Call Information The Company will hold a conference call on March 14, 2024 at 9:00 a.m. CT/10:00 a.m. ET, hosted by Todd Vasos, chief executive officer, and Kelly Dilts, chief financial officer. To participate via telephone, please call (877) 407-0890 at least 10 minutes before the conference call is scheduled to begin. The conference ID is 13743905. There will also be a live webcast of the call available at https://investor.dollargeneral.com under “News & Events, Events & Presentations.” A replay of the conference call will be available through April 11, 2024, and will be accessible via webcast replay or by calling (877) 660-6853. The conference ID for the telephonic replay is 13743905.
Forward-Looking Statements This press release contains forward-looking information within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act. Forward-looking statements include those regarding the Company’s outlook, strategy, initiatives, plans, intentions or beliefs, including, but not limited to, statements made within the quotations of Mr. Vasos and Ms. Dilts, and in the sections entitled “Share Repurchases,” “Dividend,” “Fiscal Year 2024 Financial Guidance and Store Growth Outlook,” and “Fiscal Year 2024 First Quarter Financial Guidance.” A reader can identify forward-looking statements because they are not limited to historical fact or they use words such as “outlook,” “may,” “will,” “should,” “could,” “would,” “can,” “believe,” “anticipate,” “plan,” “project,” “expect,” “estimate,” “target,” “forecast,” “accelerate,” “predict,” “position,” “assume,” “opportunities,” “prospects,” “investments,” “intend,” “continue,” “future,” “beyond,” “ongoing,” “potential,” “long-term,” “longer term,” “near-term,” “guidance,” “goal,” “outcome,” “uncertainty,” “look to,” “move into,” “moving forward,” “looking ahead,” “years ahead,” “subject to,” “committed,” “confident,” “focus on,” or “likely to,” and similar expressions that concern the Company’s outlook, strategies, plans, initiatives, intentions or beliefs about future occurrences or results. These matters involve risks, uncertainties and other factors that may change at any time and may cause actual results to differ materially from those which the Company expected. Many of these statements are derived from the Company’s operating budgets and forecasts as of the date of this release, which are based on many detailed assumptions and estimates that the Company believes are reasonable. However, it is very difficult to predict the effect of known factors on future results, and the Company cannot anticipate all factors that could affect future results that may be important to an investor. All forward-looking information should be evaluated in the context of these risks, uncertainties and other factors. Important factors that could cause actual results to differ materially from the expectations expressed in or implied by such forward-looking statements include, but are not limited to:
All forward-looking statements are qualified in their entirety by these and other cautionary statements that the Company makes from time to time in its SEC filings and public communications. The Company cannot assure the reader that it will realize the results or developments the Company anticipates or, even if substantially realized, that they will result in the consequences or affect the Company or its operations in the way the Company expects. Forward-looking statements speak only as of the date made. The Company undertakes no obligation, and specifically disclaims any duty, to update or revise any forward-looking statements as a result of new information, future events or circumstances, or otherwise, except as otherwise required by law. As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements included herein or that may be made elsewhere from time to time by, or on behalf of, the Company.
Investors should also be aware that while the Company does, from time to time, communicate with securities analysts and others, it is against the Company’s policy to disclose to them any material, nonpublic information or other confidential commercial information. Accordingly, shareholders should not assume that the Company agrees with any statement or report issued by any securities analyst regardless of the content of the statement or report. Furthermore, the Company has a policy against confirming projections, forecasts or opinions issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not the Company’s responsibility.
About Dollar General Corporation Dollar General Corporation (NYSE: DG) is proud to serve as America’s neighborhood general store. Founded in 1939, Dollar General lives its mission of Serving Others every day by providing access to affordable products and services for its customers, career opportunities for its employees, and literacy and education support for its hometown communities. As of February 2, 2024, the Company’s 19,986 Dollar General, DG Market, DGX and pOpshelf stores across the United States and Mi Súper Dollar General stores in Mexico provide everyday essentials including food, health and wellness products, cleaning and laundry supplies, self-care and beauty items, and seasonal décor from our high-quality private brands alongside many of the world’s most trusted brands such as Coca Cola, PepsiCo/Frito-Lay, General Mills, Hershey, J.M. Smucker, Kraft, Mars, Nestlé, Procter & Gamble and Unilever.
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (In thousands) (Unaudited) February 2 February 3,2024
2023
ASSETS Current assets: Cash and cash equivalents$
537,283
$
381,576
Merchandise inventories
6,994,266
6,760,733
Income taxes receivable
112,262
135,775
Prepaid expenses and other current assets
366,913
302,925
Total current assets
8,010,724
7,581,009
Net property and equipment
6,087,722
5,236,309
Operating lease assets
11,098,228
10,670,014
Goodwill
4,338,589
4,338,589
Other intangible assets, net
1,199,700
1,199,700
Other assets, net
60,628
57,746
Total assets$
30,795,591
$
29,083,367
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term obligations$
768,645
$
-
Current portion of operating lease liabilities
1,387,083
1,288,939
Accounts payable
3,587,374
3,552,991
Accrued expenses and other
971,890
1,036,919
Income taxes payable
10,709
8,919
Total current liabilities
6,725,701
5,887,768
Long-term obligations
6,231,539
7,009,399
Long-term operating lease liabilities
9,703,499
9,362,761
Deferred income taxes
1,133,784
1,060,906
Other liabilities
251,949
220,761
Total liabilities
24,046,472
23,541,595
Commitments and contingencies Shareholders' equity: Preferred stock
-
-
Common stock
192,206
191,718
Additional paid-in capital
3,757,005
3,693,871
Retained earnings
2,799,415
1,656,140
Accumulated other comprehensive income (loss)
493
43
Total shareholders' equity
6,749,119
5,541,772
Total liabilities and shareholders' equity$
30,795,591
$
29,083,367
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES Consolidated Statements of Income (In thousands, except per share amounts) (Unaudited) For the Quarter Ended (13 Weeks) (14 Weeks) February 2 % of Net February 3, % of Net2024
Sales2023
Sales Net sales$
9,858,514
100.00
%
$
10,202,907
100.00
%
Cost of goods sold
6,952,178
70.52
7,054,590
69.14
Gross profit
2,906,336
29.48
3,148,317
30.86
Selling, general and administrative expenses
2,326,682
23.60
2,215,143
21.71
Operating profit
579,654
5.88
933,174
9.15
Interest expense
77,117
0.78
74,818
0.73
Income before income taxes
502,537
5.10
858,356
8.41
Income tax expense
100,724
1.02
199,221
1.95
Net income$
401,813
4.08
%
$
659,135
6.46
%
Earnings per share: Basic$
1.83
$
2.97
Diluted$
1.83
$
2.96
Weighted average shares outstanding: Basic
219,585
221,564
Diluted
219,893
222,702
For the Year Ended (52 Weeks) (53 Weeks) February 2 % of Net February 3, % of Net2024
Sales2023
Sales Net sales$
38,691,609
100.00
%
$
37,844,863
100.00
%
Cost of goods sold
26,972,585
69.71
26,024,765
68.77
Gross profit
11,719,024
30.29
11,820,098
31.23
Selling, general and administrative expenses
9,272,724
23.97
8,491,796
22.44
Operating profit
2,446,300
6.32
3,328,302
8.79
Interest expense
326,781
0.84
211,273
0.56
Other (income) expense
-
0.00
415
0.00
Income before income taxes
2,119,519
5.48
3,116,614
8.24
Income tax expense
458,245
1.18
700,625
1.85
Net income$
1,661,274
4.29
%
$
2,415,989
6.38
%
Earnings per share: Basic$
7.57
$
10.73
Diluted$
7.55
$
10.68
Weighted average shares outstanding: Basic
219,415
225,148
Diluted
219,938
226,297
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands) (Unaudited) For the Year Ended (52 Weeks) (53 Weeks) February 2 February 3,
2024
2023
Cash flows from operating activities: Net income
$
1,661,274
$
2,415,989
Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization
848,793
724,877
Deferred income taxes
72,847
235,299
Noncash share-based compensation
51,891
72,712
Other noncash (gains) and losses
88,982
530,530
Change in operating assets and liabilities: Merchandise inventories
(299,066
)
(1,665,352
)
Prepaid expenses and other current assets
(63,576
)
(65,102
)
Accounts payable
36,940
(194,722
)
Accrued expenses and other liabilities
(39,189
)
(25,409
)
Income taxes
25,303
(37,517
)
Other
7,599
(6,750
)
Net cash provided by (used in) operating activities
2,391,798
1,984,555
Cash flows from investing activities: Purchases of property and equipment
(1,700,222
)
(1,560,582
)
Proceeds from sales of property and equipment
6,199
5,236
Net cash provided by (used in) investing activities
(1,694,023
)
(1,555,346
)
Cash flows from financing activities: Issuance of long-term obligations
1,498,260
2,296,053
Repayments of long-term obligations
(19,723
)
(911,330
)
Net increase (decrease) in commercial paper outstanding
(1,501,900
)
1,447,600
Borrowings under revolving credit facilities
500,000
-
Repayments of borrowings under revolving credit facilities
(500,000
)
-
Costs associated with issuance of debt
(12,438
)
(16,925
)
Repurchases of common stock
-
(2,748,014
)
Payments of cash dividends
(517,979
)
(493,726
)
Other equity and related transactions
11,712
33,880
Net cash provided by (used in) financing activities
(542,068
)
(392,462
)
Net increase (decrease) in cash and cash equivalents
155,707
36,747
Cash and cash equivalents, beginning of period
381,576
344,829
Cash and cash equivalents, end of period
$
537,283
$
381,576
Supplemental cash flow information: Cash paid for: Interest
$
352,473
$
195,312
Income taxes
$
359,578
$
500,814
Supplemental schedule of non-cash investing and financing activities: Right of use assets obtained in exchange for new operating lease liabilities
$
1,804,934
$
1,836,718
Purchases of property and equipment awaiting processing for payment, included in Accounts payable
$
148,137
$
150,694
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES Selected Additional Information (Unaudited) Sales by Category (in thousands) For the Quarter Ended (13 Weeks) (14 Weeks) February 2 February 3,
2024
2023
% Change Consumables
$
7,897,564
$
8,054,072
-1.9
%
Seasonal
1,104,316
1,191,702
-7.3
%
Home products
581,501
658,398
-11.7
%
Apparel
275,133
298,735
-7.9
%
Net sales$
9,858,514
$
10,202,907
-3.4
%
For the Year Ended (52 Weeks) (53 Weeks) February 2 February 3,
2024
2023
% Change Consumables
$
31,342,595
$
30,155,218
3.9
%
Seasonal
4,083,790
4,182,815
-2.4
%
Home products
2,163,806
2,332,411
-7.2
%
Apparel
1,101,418
1,174,419
-6.2
%
Net sales$
38,691,609
$
37,844,863
2.2
%
Store Activity For the 52 Weeks Ended (52 Weeks) (53 Weeks) February 2 February 3,
2024
2023
Beginning store count
19,104
18,130
New store openings
987
1,039
Store closings
(105
)
(65
)
Net new stores
882
974
Ending store count
19,986
19,104
Total selling square footage (000's)
151,095
142,987
Growth rate (square footage)
5.7
%
6.3
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20240312291397/en/
Investor Contact: investorrelations@dollargeneral.com
Media Contact: dgpr@dollargeneral.com
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