| Dollar General Corporation (NYSE: DG) today reported financial results for its fiscal 2024 second quarter (13 weeks) ended August 2, 2024. |
- Net Sales Increased 4.2% to $10.2 Billion
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- Same-store sales Increased 0.5%
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- Operating Profit Decreased 20.6% to $550.0 Million
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- Diluted Earnings Per Share (“EPS”) Decreased 20.2% to $1.70
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- Year-to-Date Cash Flows From Operations of $1.7 Billion
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- Board of Directors Declares Quarterly Cash Dividend of $0.59 Per Share
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| “We made important progress on our Back-to-Basics plan in the second quarter,” said Todd Vasos, Dollar General’s chief executive officer. “However, despite advancing several of our operational goals and driving positive traffic growth, we are not satisfied with our financial results, including top-line results below our expectations for the quarter.” |
| “While we believe the softer sales trends are partially attributable to a core customer who feels financially constrained, we know the importance of controlling what we can control. With the evolving retail and consumer landscape in mind, we are taking decisive action to further enhance our value and convenience offering, as well as the in-store experience for our associates and customers.” |
| “Dollar General has a long history of serving customers in a variety of macroeconomic environments, and we believe the actions we are taking will allow us to further strengthen our position and build on our Back-to-Basics progress, as we seek to deliver sustainable growth and long-term shareholder value.” |
| Second Quarter 2024 Highlights |
| Net sales increased 4.2% to $10.2 billion in the second quarter of 2024 compared to $9.8 billion in the second quarter of 2023. 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 0.5% compared to the second quarter of 2023, driven by an increase in customer traffic, partially offset by a decrease in average transaction amount. Same-store sales in the second quarter of 2024 included growth in the consumables category, partially offset by declines in each of the seasonal, home, and apparel categories. |
| Gross profit as a percentage of net sales was 30.0% in the second quarter of 2024 compared to 31.1% in the second quarter of 2023, a decrease of 112 basis points. This gross profit rate decrease was primarily attributable to increased markdowns, increased inventory damages, a greater proportion of sales coming from the consumables category, and increased shrinkage. These factors were partially offset by a lower LIFO provision. |
| Selling, general and administrative expenses (“SG&A”) as a percentage of net sales were 24.6% in the second quarter of 2024 compared to 24.0% in the second quarter of 2023, an increase of 57 basis points. The primary expenses that were a greater percentage of net sales in the current year period were retail labour, depreciation and amortization, store occupancy costs, and utilities. These factors were partially offset by a decrease in incentive compensation. |
| Operating profit for the second quarter of 2024 decreased 20.6% to $550.0 million compared to $692.3 million in the second quarter of 2023. |
| Net interest expense for the second quarter of 2024 decreased 19.2% to $68.1 million compared to $84.3 million in the second quarter of 2023. |
| The effective income tax rate for the second quarter of 2024 was 22.3% compared to 22.9% in the second quarter of 2023. 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. |
| The Company reported net income of $374.2 million for the second quarter of 2024, a decrease of 20.2% compared to $468.8 million in the second quarter of 2023. Diluted EPS decreased 20.2% to $1.70 for the second quarter of 2024 compared to diluted EPS of $2.13 in the second quarter of 2023. |
| Merchandise Inventories |
| As of August 2, 2024, total merchandise inventories, at cost, were $7.0 billion compared to $7.5 billion as of August 4, 2023, a decrease of 11.0% on a per-store basis. |
| Capital Expenditures |
| Total additions to property and equipment in the 26 weeks ended August 2, 2024, were $696 million, including approximately: $255 million for improvements, upgrades, remodels and relocations of existing stores; $216 million related to store facilities, primarily for leasehold improvements, fixtures and equipment in new stores; $199 million for distribution and transportation-related projects; and $20 million for information systems upgrades and technology-related projects. During the second quarter of 2024, the Company opened 213 new stores, remodelled 478 stores, and relocated 25 stores. |
| Share Repurchases |
| In the second quarter of 2024, 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 the second quarter of 2024. |
| Under the authorization, repurchases may be made from time to time in open market transactions, including under trading plans adopted by 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 August 28, 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 October 22, 2024, to shareholders of record on October 8, 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 |
| The Company is updating its financial guidance provided on May 30, 2024, primarily to reflect the softer sales trends and related gross margin impacts, which are anticipated to continue through the remainder of the 52-week fiscal year ending January 31, 2025 (“fiscal year 2024”). |
| The Company now expects the following for fiscal year 2024: |
- Net sales growth in the range of approximately 4.7% to 5.3%, compared to its previous expectation of approximately 6.0% to 6.7%
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- Same-store sales growth in the range of approximately 1.0% to 1.6%, compared to its previous expectation in the range of 2.0% to 2.7%
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- Diluted EPS in the range of approximately $5.50 to $6.20, compared to its previous expectation of approximately $6.80 to $7.55
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- The Company now expects an immaterial impact on EPS from incentive compensation expense, compared to its previous expectation of an estimated negative impact on EPS of approximately $0.50
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- Diluted EPS guidance assumes an effective tax rate of approximately 23%, compared to its previous expectation in the range of approximately 22.5% to 23.5%
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| The Company continues to expect the following for fiscal year 2024: |
- Capital expenditures, including those related to investments in the Company’s strategic initiatives, in the range of $1.3 billion to $1.4 billion
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- 2,435 real estate projects, including 730 new store openings, 1,620 remodels, and 85 store relocations
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| The Company’s financial guidance also continues to assume no share repurchases in fiscal year 2024. |
| For the full document click the link below: |
| Dollar General Corporation |
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