Dollar General Corporation Reports First Quarter 2024 Results
Thu, 30 May 2024
Provides Financial Guidance for 2024 Second Quarter; Reiterates 2024 Full Year Financial Guidance
Updates Real Estate Plans for 2024 Full Year
-
Net Sales Increased 6.1% to
$9.9 Billion - Same-Store Sales Increased 2.4%
-
Operating Profit Decreased 26.3% to
$546.1 Million -
Diluted EPS Decreased 29.5% to
$1.65 -
Cash Flows From Operations Increased 247.3% to
$663.8 Million -
Board of Directors Declares Quarterly Cash Dividend of
$0.59 per share
“We are pleased with our start to 2024, including top and bottom-line results that exceeded our expectations in the first quarter,” said
“I want to thank our entire team for their dedication to fulfilling our mission of Serving Others every day. Because of their efforts, we continue to make progress executing on our Back to Basics strategy, which we believe is resonating positively with our customers in the store. Looking ahead, we continue to focus on actions designed to enhance the way we support our teams and serve our customers, while creating sustainable long-term value for our shareholders.”
First Quarter Fiscal 2024 Highlights
Net sales increased 6.1% to
Gross profit as a percentage of net sales was 30.2% in the first quarter of 2024 compared to 31.6% in the first quarter of 2023, a decrease of 145 basis points. This gross profit rate decrease was primarily attributable to increased shrink and inventory markdowns, a greater proportion of sales coming from the consumables category, and lower inventory markups. These factors were partially offset by a lower LIFO provision.
Selling, general and administrative expenses (“SG&A”) as a percentage of net sales were 24.7% in the first quarter of 2024 compared to 23.7% in the first quarter of 2023, an increase of 97 basis points. The primary expenses that were a higher percentage of net sales in the first quarter of 2024 were retail labor, depreciation and amortization, incentive compensation, and repairs and maintenance.
Operating profit for the first quarter of 2024 decreased 26.3% to
Net interest expense for the first quarter of 2024 decreased 12.8% to
The effective income tax rate in the first quarter of 2024 was 23.3% compared to 21.8% in the first quarter of 2023. This higher effective income tax rate was primarily due to the effect of certain rate-impacting items on lower earnings before taxes and expense recognition attributable to stock-based compensation.
The Company reported net income of
Merchandise Inventories
As of
Capital Expenditures
Total additions to property and equipment in the first quarter of 2024 were
Share Repurchases
In the first 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
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
Fiscal Year 2024 Financial Guidance and Store Growth Outlook
For the 52-week fiscal year ending
- Net sales growth in the range of approximately 6.0% to 6.7%
- Same-store sales growth in the range of 2.0% to 2.7%
-
Diluted EPS in the range of approximately
$6.80 to$7.55 -
The Company currently anticipates an estimated negative impact to EPS of approximately
$0.50 due to higher incentive compensation expense - Diluted EPS guidance assumes an effective tax rate in the range of approximately 22.5% to 23.5%
-
The Company currently anticipates an estimated negative impact to EPS of approximately
-
Capital expenditures, including those related to investments in the Company’s strategic initiatives, in the range of
$1.3 billion to$1.4 billion
The Company’s financial guidance continues to assume no share repurchases in fiscal year 2024.
In order to better optimize the planned capital expenditures for fiscal year 2024 and to expand the investment in mature stores, the Company is increasing the number of store remodels and reducing the number of expected new store openings, resulting in an overall net increase in the number of total expected real estate projects for the year.
The Company now expects to execute 2,435 real estate projects, including 730 new store openings, 1,620 remodels, and 85 store relocations, which compares to its previous expectation of 2,385 real estate projects in fiscal 2024, including 800 new store openings, 1,500 remodels, and 85 store relocations.
“While it is still early in our fiscal year, we are encouraged by our first quarter financial results,” said
Fiscal Year 2024 Second Quarter Financial Guidance
For the 13-week quarter ending
Conference Call Information
The Company will hold a conference call on
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
- economic factors, including but not limited to employment levels; inflation (and the Company’s ability to adjust prices sufficiently to offset the effect of inflation); pandemics (such as the COVID-19 pandemic); higher fuel, energy, healthcare, housing and product costs; higher interest rates, consumer debt levels, and tax rates; lack of available credit; tax law changes that negatively affect credits and refunds; decreases in, or elimination of, government assistance programs or subsidies such as unemployment and food/nutrition assistance programs, student loan repayment forgiveness and economic stimulus payments; commodity rates; transportation, lease and insurance costs; wage rates (including the heightened possibility of increased federal, and further increased state and/or local minimum wage rates/salary levels); foreign exchange rate fluctuations; measures that create barriers to or increase the costs of international trade (including increased import duties or tariffs); and changes in laws and regulations and their effect on, as applicable, customer spending and disposable income, the Company’s ability to execute its strategies and initiatives, the Company’s cost of goods sold, the Company’s SG&A expenses (including real estate costs), and the Company’s sales and profitability;
- failure to achieve or sustain the Company’s strategies, initiatives and investments, including those relating to merchandising (including those related to non-consumable products), real estate and new store development, international expansion, store formats and concepts, digital, marketing, shrink, damages, sourcing, private brand, inventory management, supply chain, private fleet, store operations, expense reduction, technology, pOpshelf, self-checkout, and DG Media Network;
- competitive pressures and changes in the competitive environment and the geographic and product markets where the Company operates, including, but not limited to, pricing, promotional activity, expanded availability of mobile, web-based and other digital technologies, and alliances or other business combinations;
- failure to timely and cost-effectively execute the Company’s real estate projects or to anticipate or successfully address the challenges imposed by the Company’s expansion, including into new countries or domestic markets, states, or urban or suburban areas;
- levels of inventory shrinkage and damages;
- failure to successfully manage inventory balances and in-stock levels, as well as to predict customer trends;
-
failure to maintain the security of the Company’s business, customer, employee or vendor information or to comply with privacy laws, or the Company or one of its vendors falling victim to a cyberattack (which risk is heightened as a result of political uncertainty involving
China , the conflict betweenRussia andUkraine and the conflict in theMiddle East ) that prevents the Company from operating all or a portion of its business; - damage or interruption to the Company’s information systems as a result of external factors, staffing shortages or challenges in maintaining or updating the Company’s existing technology or developing, implementing or integrating new technology;
- a significant disruption to the Company’s distribution network, the capacity of the Company’s distribution centers or the timely receipt of inventory; increased fuel or transportation costs; issues related to supply chain disruptions or seasonal buying pattern disruptions; or delays in constructing, opening or staffing new distribution centers (including temperature-controlled distribution centers);
-
risks and challenges associated with sourcing merchandise from suppliers, including, but not limited to, those related to international trade (for example, political uncertainty involving
China and disruptive political events such as the conflict betweenRussia andUkraine and the conflict in theMiddle East ); -
natural disasters, unusual weather conditions (whether or not caused by climate change), pandemic outbreaks or other health crises (for example, the COVID-19 pandemic), political or civil unrest, acts of war, violence or terrorism, and disruptive global political events (for example, political uncertainty involving
China , the conflict betweenRussia andUkraine and the conflict in theMiddle East ); - product liability, product recall or other product safety or labeling claims;
- incurrence of material uninsured losses, excessive insurance costs or accident costs;
- failure to attract, develop and retain qualified employees while controlling labor costs (including the heightened possibility of increased federal, and further increased state and/or local minimum wage rates/salary levels, including the effects of regulatory changes related to the overtime exemption under the Fair Labor Standards Act if implemented as currently written) and other labor issues, including employee safety issues and employee expectations and productivity;
- loss of key personnel or inability to hire additional qualified personnel, ability to successfully execute management transitions within the Company’s senior leadership; or inability to enforce non-compete agreements that we have in place with management personnel or enter into new non-compete agreements;
- risks associated with the Company’s private brands, including, but not limited to, the Company’s level of success in improving their gross profit rate at expected levels;
- failure to protect the Company’s reputation;
- seasonality of the Company’s business;
-
the impact of changes in or noncompliance with governmental regulations and requirements, including, but not limited to, those dealing with the sale of products, including without limitation, product and food safety, marketing, labeling or pricing; information security and privacy; labor and employment; employee wages, salary levels and benefits (including the heightened possibility of increased federal, and further increased state and/or local minimum wage rates and the effects of regulatory changes related to the overtime exemption under the Fair Labor Standards Act if implemented as currently written); health and safety; real property; public accommodations; imports and customs; transportation; intellectual property; bribery; climate change; and environmental compliance (including required public disclosures related thereto), as well as tax laws (including those related to the federal, state or foreign corporate tax rate), the interpretation of existing tax laws, or the Company’s failure to sustain its reporting positions negatively affecting the Company’s tax rate, and developments in or outcomes of private actions, class actions, multi-district litigation, arbitrations, derivative actions, administrative proceedings, regulatory actions or other litigation or of inquiries from federal, state and local agencies, regulatory authorities, attorneys general, committees, subcommittees and members of the
U.S. Congress , and other local, state, federal and international governmental authorities; - new accounting guidance or changes in the interpretation or application of existing guidance;
- deterioration in market conditions, including market disruptions, adverse conditions in the financial markets including financial institution failures, limited liquidity and interest rate increases, changes in the Company’s credit profile (including any downgrade to our credit ratings), compliance with covenants and restrictions under the Company’s debt agreements, and the amount of the Company’s available excess capital;
- the factors disclosed under “Risk Factors” in the Company’s most recent Annual Report on Form 10-K and any subsequently filed Quarterly Reports on Form 10-Q; and
- such other factors as may be discussed or identified in this press release.
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
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 AND SUBSIDIARIES | |||||||||
| Condensed Consolidated Balance Sheets | |||||||||
| (In thousands) | |||||||||
| (Unaudited) | |||||||||
2024 |
2023 |
2024 |
|||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ |
720,700 |
$ |
313,064 |
$ |
537,283 |
|||
| Merchandise inventories |
|
6,934,389 |
|
7,335,845 |
|
6,994,266 |
|||
| Income taxes receivable |
|
34,946 |
|
50,863 |
|
112,262 |
|||
| Prepaid expenses and other current assets |
|
406,936 |
|
355,688 |
|
366,913 |
|||
| Total current assets |
|
8,096,971 |
|
8,055,460 |
|
8,010,724 |
|||
| Net property and equipment |
|
6,172,496 |
|
5,420,134 |
|
6,087,722 |
|||
| Operating lease assets |
|
11,138,733 |
|
10,726,523 |
|
11,098,228 |
|||
|
4,338,589 |
|
4,338,589 |
|
4,338,589 |
||||
| Other intangible assets, net |
|
1,199,700 |
|
1,199,700 |
|
1,199,700 |
|||
| Other assets, net |
|
63,010 |
|
63,527 |
|
60,628 |
|||
| Total assets | $ |
31,009,499 |
$ |
29,803,933 |
$ |
30,795,591 |
|||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
| Current liabilities: | |||||||||
| Current portion of long-term obligations | $ |
769,139 |
$ |
- |
$ |
768,645 |
|||
| Short-term borrowings |
|
- |
|
250,000 |
|
- |
|||
| Current portion of operating lease liabilities |
|
1,406,970 |
|
1,311,753 |
|
1,387,083 |
|||
| Accounts payable |
|
3,472,487 |
|
3,679,170 |
|
3,587,374 |
|||
| Accrued expenses and other |
|
976,076 |
|
848,757 |
|
971,890 |
|||
| Income taxes payable |
|
17,190 |
|
10,999 |
|
10,709 |
|||
| Total current liabilities |
|
6,641,862 |
|
6,100,679 |
|
6,725,701 |
|||
| Long-term obligations |
|
6,222,387 |
|
7,028,767 |
|
6,231,539 |
|||
| Long-term operating lease liabilities |
|
9,723,314 |
|
9,399,833 |
|
9,703,499 |
|||
| Deferred income taxes |
|
1,157,660 |
|
1,111,434 |
|
1,133,784 |
|||
| Other liabilities |
|
264,097 |
|
227,969 |
|
251,949 |
|||
| Total liabilities |
|
24,009,320 |
|
23,868,682 |
|
24,046,472 |
|||
| Commitments and contingencies | |||||||||
| Shareholders' equity: | |||||||||
| Preferred stock |
|
- |
|
- |
|
- |
|||
| Common stock |
|
192,407 |
|
191,921 |
|
192,206 |
|||
| Additional paid-in capital |
|
3,774,363 |
|
3,701,564 |
|
3,757,005 |
|||
| Retained earnings |
|
3,032,996 |
|
2,041,118 |
|
2,799,415 |
|||
| Accumulated other comprehensive income (loss) |
|
413 |
|
648 |
|
493 |
|||
| Total shareholders' equity |
|
7,000,179 |
|
5,935,251 |
|
6,749,119 |
|||
| Total liabilities and shareholders' equity | $ |
31,009,499 |
$ |
29,803,933 |
$ |
30,795,591 |
|||
|
|||||||||||
| DOLLAR GENERAL CORPORATION AND SUBSIDIARIES | |||||||||||
| Consolidated Statements of Income | |||||||||||
| (In thousands, except per share amounts) | |||||||||||
| (Unaudited) | |||||||||||
| For the Quarter Ended | |||||||||||
| % of Net | % of Net | ||||||||||
2024 |
Sales | 2023 |
Sales | ||||||||
| Net sales | $ |
9,914,021 |
100.00 |
% |
$ |
9,342,832 |
100.00 |
% |
|||
| Cost of goods sold |
|
6,921,872 |
69.82 |
|
|
6,387,358 |
68.37 |
|
|||
| Gross profit |
|
2,992,149 |
30.18 |
|
|
2,955,474 |
31.63 |
|
|||
| Selling, general and administrative expenses |
|
2,446,045 |
24.67 |
|
|
2,214,616 |
23.70 |
|
|||
| Operating profit |
|
546,104 |
5.51 |
|
|
740,858 |
7.93 |
|
|||
| Interest expense, net |
|
72,433 |
0.73 |
|
|
83,038 |
0.89 |
|
|||
| Income before income taxes |
|
473,671 |
4.78 |
|
|
657,820 |
7.04 |
|
|||
| Income tax expense |
|
110,354 |
1.11 |
|
|
143,440 |
1.54 |
|
|||
| Net income | $ |
363,317 |
3.66 |
% |
$ |
514,380 |
5.51 |
% |
|||
| Earnings per share: | |||||||||||
| Basic | $ |
1.65 |
$ |
2.35 |
|||||||
| Diluted | $ |
1.65 |
$ |
2.34 |
|||||||
| Weighted average shares outstanding: | |||||||||||
| Basic |
|
219,748 |
|
219,193 |
|||||||
| Diluted |
|
220,052 |
|
220,107 |
|||||||
|
||||||||
| DOLLAR GENERAL CORPORATION AND SUBSIDIARIES | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| For the Year Ended | ||||||||
| (13 Weeks) | (13 Weeks) | |||||||
2024 |
2023 |
|||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ |
363,317 |
|
$ |
514,380 |
|
||
| Adjustments to reconcile net income to net cash | ||||||||
| from operating activities: | ||||||||
| Depreciation and amortization |
|
232,286 |
|
|
201,907 |
|
||
| Deferred income taxes |
|
23,876 |
|
|
50,442 |
|
||
| Noncash share-based compensation |
|
21,846 |
|
|
25,083 |
|
||
| Other noncash (gains) and losses |
|
15,052 |
|
|
28,630 |
|
||
| Change in operating assets and liabilities: | ||||||||
| Merchandise inventories |
|
49,562 |
|
|
(601,138 |
) |
||
| Prepaid expenses and other current assets |
|
(42,650 |
) |
|
(56,866 |
) |
||
| Accounts payable |
|
(95,686 |
) |
|
116,363 |
|
||
| Accrued expenses and other liabilities |
|
14,814 |
|
|
(176,804 |
) |
||
| Income taxes |
|
83,797 |
|
|
86,992 |
|
||
| Other |
|
(2,408 |
) |
|
2,126 |
|
||
| Net cash provided by (used in) operating activities |
|
663,806 |
|
|
191,115 |
|
||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment |
|
(341,975 |
) |
|
(363,141 |
) |
||
| Proceeds from sales of property and equipment |
|
814 |
|
|
1,539 |
|
||
| Net cash provided by (used in) investing activities |
|
(341,161 |
) |
|
(361,602 |
) |
||
| Cash flows from financing activities: | ||||||||
| Repayments of long-term obligations |
|
(5,205 |
) |
|
(4,505 |
) |
||
| Net increase (decrease) in commercial paper outstanding |
|
- |
|
|
3,068 |
|
||
| Borrowings under revolving credit facilities |
|
- |
|
|
500,000 |
|
||
| Repayments of borrowings under revolving credit facilities |
|
- |
|
|
(250,000 |
) |
||
| Payments of cash dividends |
|
(129,736 |
) |
|
(129,401 |
) |
||
| Other equity and related transactions |
|
(4,287 |
) |
|
(17,187 |
) |
||
| Net cash provided by (used in) financing activities |
|
(139,228 |
) |
|
101,975 |
|
||
| Net increase (decrease) in cash and cash equivalents |
|
183,417 |
|
|
(68,512 |
) |
||
| Cash and cash equivalents, beginning of period |
|
537,283 |
|
|
381,576 |
|
||
| Cash and cash equivalents, end of period | $ |
720,700 |
|
$ |
313,064 |
|
||
| Supplemental cash flow information: | ||||||||
| Cash paid for: | ||||||||
| Interest | $ |
117,837 |
|
$ |
145,419 |
|
||
| Income taxes | $ |
3,036 |
|
$ |
5,992 |
|
||
| Supplemental schedule of non-cash investing and financing activities: | ||||||||
| Right of use assets obtained in exchange for new operating lease liabilities | $ |
404,716 |
|
$ |
386,055 |
|
||
| Purchases of property and equipment awaiting processing for payment, | ||||||||
| included in Accounts payable | $ |
128,936 |
|
$ |
160,510 |
|
||
| DOLLAR GENERAL CORPORATION AND SUBSIDIARIES | |||||||||
| Selected Additional Information | |||||||||
| (Unaudited) | |||||||||
| Sales by Category (in thousands) | |||||||||
| For the Quarter Ended | |||||||||
2024 |
2023 |
% Change | |||||||
| Consumables | $ |
8,210,850 |
$ |
7,582,882 |
|
8.3 |
% |
||
| Seasonal |
|
963,514 |
|
962,681 |
|
0.1 |
% |
||
| Home products |
|
478,791 |
|
531,189 |
|
-9.9 |
% |
||
| Apparel |
|
260,866 |
|
266,080 |
|
-2.0 |
% |
||
| Net sales | $ |
9,914,021 |
$ |
9,342,832 |
|
6.1 |
% |
||
| Store Activity | |||||||||
| For the Quarter Ended | |||||||||
2024 |
2023 |
||||||||
| Beginning store count |
|
19,986 |
|
19,104 |
|
||||
| New store openings |
|
197 |
|
212 |
|
||||
| Store closings |
|
(34 |
) |
(22 |
) |
||||
| Net new stores |
|
163 |
|
190 |
|
||||
| Ending store count |
|
20,149 |
|
19,294 |
|
||||
| Total selling square footage (000's) |
|
152,609 |
|
144,696 |
|
||||
| Growth rate (square footage) |
|
5.5 |
% |
6.0 |
% |
||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240530065818/en/
Investor Contact:
investorrelations@dollargeneral.com
Media Contact:
dgpr@dollargeneral.com
Source: