Dollar General Q4 Profit Down 39%, But Results Top Estimates

(RTTNews) - Discount retailer Dollar General Corp. (DG) reported on Thursday that net profit for the fourth quarter declined 39 percent from last year, due to lower gross margins, higher expenses and a sales decline across categories. However, adjusted earnings per share and quarterly net sales topped analysts' estimates. The company also provided net sales growth guidance for the full-year 2024, well above estimates.

In pre-market activity on the NYSE, Dollar General shares are surging $7.33 or 4.63 percent to trade at $165.50.

"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," said Todd Vasos, Dollar General's chief executive officer.

For the fourth quarter, the variety stores chain reported net income of $401.81 million or $1.83 per share, down from $659.14 million or $2.96 per share in the prior-quarter.

On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $1.75 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter decreased 3.4 percent to $9.86 billion from $10.20 billion in the same quarter last year. Analysts expected net sales of $9.78 billion for the quarter.

The company said 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 percent, driven by an increase in customer traffic, partially offset by a decrease in average transaction amount.

Gross margin declined 138 basis points to 29.5 percent, due to increased shrink and inventory markdowns, lower inventory markups, and a greater proportion of sales coming from the low margin consumables category.

Selling, general and administrative expenses as a percentage of net sales increased 189 basis points to 23.6 percent.

Looking ahead to the first quarter, the company expects earnings in a range of $1.50 to $1.60 per share on a same-store sales growth of 1.5 to 2.0 percent. Analysts expect earnings of $1.89 per share for the quarter. For fiscal 2024, the company now projects earnings in a range of $6.80 to $7.55 per share on net sales growth of 6.0 to 6.7 percent, with same-store sales growth of 2.0 to 2.7 percent.

The Street is looking for earnings of $7.55 per share on net sales growth of 4.4 percent to $40.33 billion for the year.

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.

On Wednesday, 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.

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