Dollar General Q4 tops estimates; sales fueled by food, other essentials
Dollar General Corp. reported better-than-expected earnings and sales and issued an upbeat outook as inflation-pressured consumers shopped its stores for low-priced basics.
The discounter also reiterated its plans to undertake approximately 2,385 real estate projects in fiscal year 2024, including approximately 800 new store openings, 1,500 remodels and 85 store relocations. In fiscal 2024, the retailer opened 987 stores, remodeled 2,007 stores and relocated 129.
Dollar General reported its results one day after rival Dollar Tree said it plans to close about 600 Family Dollar stores in the first half of fiscal 2024, with another 370 Family Dollar stores and 30 Dollar Tree locations to close over the next several years.
Dollar General’s net income income fell to $401.8 million, or $1.83 a share, for the quarter ended Feb. 3, from $659.1 million, or $2.96 a share, in the year-ago period. Analysts had earnings per share of $1.73.
Net sales fell 3.4% to $9.86 billion (partially due to the quarter containing one less week than last year), topping estimates of $9.77 billion. Same-store sales, rose 0.7%, fueled by a 4% increase in customer traffic which offset a decrease in the average transaction.
Dollar General said same-store sales growth came from strength in the consumables category, which includes food, cleaning products and health and beauty products, partially offset by weakness in home products, apparel and seasonal categories.
“We were pleased to deliver fourth quarter top and bottom-line results at the upper end of our internal expectations,” said Todd Vasos, CEO. “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.”
Vasos returned as CEO of Dollar General in October 2023. Under his leadership, the company has focused on basics, including expanding its fresh produce selection and private-label brand.
“We have made solid progress executing on our Back to Basics strategy, which we believe supported our improved operational performance during the quarter,” Vasos stated. “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.”
Gross margin declined about 1.4 percentage points to 29.5%, due to increased shrink and inventory markdowns
Looking ahead, Dollar General expects first-quarter earnings per share of $1.50 to $1.60. Same-store sales are expected to grow 1.5% to 2%, way ahead of analysts' estimates.
For fiscal 2024, the company expects earnings per share of $6.80 to $7.55. Same-store sales re expected to increase 2% to 2.7%, more than expected.
As of Feb. 2, 2024, the retailer operated 19,986 Dollar General, DG Market, DGX and PopShelf stores across the United States and Mi Súper Dollar General stores in Mexico.