Raises Sales Guidance for Fiscal Year 2022
Dollar General Corporation (NYSE: DG) today reported financial
results for its fiscal year 2022 first quarter (13 weeks) ended
April 29, 2022.
- Net Sales Increased 4.2% to $8.8 Billion
- Same-Store Sales Decreased 0.1%
- Operating Profit Decreased 17.9% to $746.2 Million
- Diluted Earnings Per Share (“EPS”) Decreased 14.5% to
$2.41
- Cash Flows From Operations of $449.5 Million
- Board of Directors Declares Quarterly Cash Dividend of $0.55
per share
“We are pleased with our start to 2022, and I want to thank each
of our team members for their ongoing commitment and dedication to
serving our customers every day,” said Todd Vasos, Dollar General’s
chief executive officer. “Despite ongoing headwinds due to supply
chain pressures and heightened inflation, we remained focused on
controlling what we can control and delivered solid financial
results, which exceeded our expectations for sales and EPS for the
quarter.”
“During the first quarter, we executed more than 800 real estate
projects, and made significant progress advancing our key strategic
initiatives to enhance the value and convenience proposition for
our customers. We continue to drive strategic innovation as we
further differentiate Dollar General in the discount retail
channel, while delivering long-term sustainable growth and value
for our shareholders.”
First Quarter 2022
Highlights
Net sales increased 4.2% to $8.8 billion in the first quarter of
2022 compared to $8.4 billion in the first quarter of 2021. The net
sales increase was primarily driven by positive sales contributions
from new stores, partially offset by the slight decline in
same-store sales and the impact of store closures. Same-store sales
decreased 0.1% compared to the first quarter of 2021, driven by a
decline in customer traffic, partially offset by an increase in
average transaction amount. Same-store sales in the first quarter
of 2022 declined in each of the seasonal, apparel, and home
products categories, offset by an increase in the consumables
category.
Gross profit as a percentage of net sales was 31.3% in the first
quarter of 2022 compared to 32.8% in the first quarter of 2021, a
decrease of 151 basis points. This gross profit rate decrease was
primarily attributable to a greater proportion of sales coming from
the consumables category, which generally has a lower gross profit
rate than other product categories; an increased LIFO provision,
which was driven by higher product costs; increased transportation
costs; an increase in markdowns as a percentage of sales; increased
distribution costs; and an increase in inventory damages. These
factors were partially offset by higher inventory markups.
Selling, general and administrative expenses (“SG&A”) as a
percentage of net sales were 22.8% in the first quarter of 2022
compared to 22.0% in the first quarter of 2021, an increase of 78
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 and utilities;
partially offset by reductions in incentive compensation and winter
storm related disaster expenses.
Operating profit for the first quarter of 2022 decreased 17.9%
to $746.2 million compared to $908.9 million in the first quarter
of 2021.
The effective income tax rate in the first quarter of 2022 was
21.8% compared to 22.0% in the first quarter of 2021. This lower
effective income tax rate was primarily due to a decrease in
pre-tax earnings in the 2022 period compared to the 2021 period
while rate impacting items, such as the benefits from stock-based
compensation and federal tax credits, remained materially the same
in amount in both the 2022 and 2021 periods.
The Company reported net income of $552.7 million for the first
quarter of 2022, a decrease of 18.5% compared to $677.7 million in
the first quarter of 2021. Diluted EPS decreased 14.5% to $2.41 for
the first quarter of 2022 compared to diluted EPS of $2.82 in the
first quarter of 2021.
Merchandise Inventories
As of April 29, 2022, total merchandise inventories, at cost,
were $6.1 billion compared to $5.1 billion as of April 30, 2021, an
increase of 13.3% on a per-store basis. This increase primarily
reflects the impact of product cost inflation and a greater mix of
higher-value products.
Capital Expenditures
Total additions to property and equipment in first quarter of
2022 were $282 million, including approximately: $112 million for
improvements, upgrades, remodels and relocations of existing
stores; $107 million related to store facilities, primarily for
leasehold improvements, fixtures and equipment in new stores; $47
million for distribution and transportation-related projects; and
$9 million for information systems upgrades and technology-related
projects. During first quarter of 2022, the Company opened 239 new
stores, remodeled 532 stores, and relocated 32 stores.
Share Repurchases
In the first quarter of 2022, the Company repurchased $747
million of its common stock, or 3.4 million shares, at an average
price of $220.13 per share, under its share repurchase program. The
total remaining authorization for future repurchases was $1.4
billion at the end of the first quarter of 2022. 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 and
other factors. The authorization has no expiration date.
Dividend
On May 25, 2022, the Company’s Board of Directors declared a
quarterly cash dividend of $0.55 per share on the Company’s common
stock, payable on or before July 19, 2022 to shareholders of record
on July 5, 2022. While the Board of Directors 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, and other factors the Board may deem relevant in its
sole discretion.
Fiscal Year 2022 Financial Guidance and
Store Growth Outlook
Despite the ongoing uncertainties arising from product cost
inflation and continued pressure in the supply chain, the Company
is updating its sales guidance, and reiterating the remainder of
its financial guidance, for the 53-week fiscal year ending February
3, 2023 (“fiscal year 2022”) issued on March 17, 2022. The Company
now expects the following:
- Net sales growth of approximately 10.0% -10.5%, including an
estimated benefit of approximately two percentage points from the
53rd week; compared to its previous expectation of approximately
10%, including an estimated benefit of approximately two percentage
points from the 53rd week; and
- Same-store sales growth of approximately 3.0% -3.5%; compared
to its previous expectation of 2.5%.
The Company continues to expect the following:
- Diluted EPS growth in the range of approximately 12% to 14%,
including an estimated benefit of approximately four percentage
points from the 53rd week;
- This Diluted EPS guidance assumes an effective tax rate in the
range of 22.5% to 23.0%;
- Share repurchases of approximately $2.75 billion; and
- Capital expenditures, including those related to investments in
the Company’s strategic initiatives, in the range of $1.4 billion
to $1.5 billion.
The Company is also reiterating its plans to execute 2,980 real
estate projects in fiscal year 2022, including 1,110 new store
openings, 1,750 remodels, and 120 store relocations.
“We are pleased with our strong start to the year,” said John
Garratt, Dollar General’s chief financial officer. “As a result of
our strong topline performance and current expectations for the
remainder of the year, we are raising our net sales and same-store
sales guidance for fiscal 2022. Looking ahead, our plans include
targeted investments to further enhance the in-store experience,
while driving an even greater improvement in in-stock levels and
customer service. We believe these investments will position us
well to build on our sales momentum as we move ahead.”
Conference Call
Information
The Company will hold a conference call on May 26, 2022 at 9:00
a.m. CT/10:00 a.m. ET, hosted by Todd Vasos, chief executive
officer, Jeff Owen, chief operating officer, and John Garratt,
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 13729427. 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 June 23, 2022, and will be accessible via webcast
replay or by calling (877) 660-6853. The conference ID for the
telephonic replay is 13729427.
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 and intentions including, but not limited to,
statements made within the quotation of Mr. Vasos, and in the
sections entitled “Share Repurchases,” “Dividend,” and “Fiscal Year
2022 Financial Guidance and Store Growth Outlook.” 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,” “predict,”
“position,” “assume,” “opportunities,” “intend,” “continue,”
“future,” “beyond,” “ongoing,” “potential,” “long-term,”
“guidance,” “goal,” “outcome,” “uncertainty,” “look to,” “move
ahead,” “looking ahead,” “subject to,” “committed,” “confident,”
“focus on,” or “likely to,” and similar expressions that concern
the Company’s 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 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:
- risks related to the COVID-19 pandemic and associated
governmental responses, including but not limited to, the effects
on the Company’s supply chain, distribution network, store and
distribution center growth, store and distribution center closures,
transportation and distribution costs, SG&A expenses, share
repurchase activity, and cybersecurity risk profile, as well as the
effects on domestic and foreign economies, the global supply chain,
labor availability, and customers’ spending patterns;
- economic factors, including but not limited to employment
levels; inflation; pandemics; higher fuel, energy, healthcare and
housing costs, interest rates, consumer debt levels, and tax rates;
tax law changes that negatively affect credits and refunds; lack of
available credit; decreases in, or elimination of, government
stimulus programs or subsidies such as unemployment, food/nutrition
assistance programs, and the Child Tax Credit; commodity rates;
transportation, lease and insurance costs; wage rates (including
the heightened possibility of increased federal, state and/or local
minimum wage rates); foreign exchange rate fluctuations; measures
or events 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 and
initiatives, including those relating to merchandising, real estate
and new store development, international expansion, store formats
and concepts, digital, marketing, health services, shrink,
sourcing, private brand, inventory management, supply chain, store
operations, expense reduction, technology, pOpshelf, DG Fresh
initiative, Fast Track, 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;
- failure to successfully manage inventory balances;
- 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 the current
conflict between Russia and Ukraine) 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 or implementing 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, or delays in constructing, opening or
staffing new distribution centers;
- risks and challenges associated with sourcing merchandise from
suppliers, including, but not limited to, those related to
international trade (for example, disruptive political events like
the current conflict between Russia and Ukraine);
- natural disasters, unusual weather conditions (whether or not
caused by climate change), pandemic outbreaks or other health
crises, political or civil unrest, acts of war, violence or
terrorism, and disruptive global political events (for example, the
current conflict between Russia and Ukraine);
- 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, state and/or local minimum wage rates/salary
levels) and other labor issues;
- loss of key personnel or inability to hire additional qualified
personnel;
- 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;
- seasonality of the Company’s business;
- failure to protect the Company’s reputation;
- 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 or labeling; information
security and privacy; labor and employment; employee wages and
benefits (including the heightened possibility of increased
federal, state and/or local minimum wage rates/salary levels);
health and safety; imports and customs; bribery; climate change;
and environmental compliance, 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, limited liquidity and interest rate fluctuations, or
changes in the Company’s credit profile;
- 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 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 has been delivering value to shoppers
for more than 80 years. Dollar General helps shoppers Save time.
Save money. Every day.® by offering products that are frequently
used and replenished, such as food, snacks, health and beauty aids,
cleaning supplies, basic apparel, housewares and seasonal items at
everyday low prices in convenient neighborhood locations. Dollar
General operated 18,356 stores in 47 states as of April 29, 2022.
In addition to high-quality private brands, Dollar General sells
products from America's most-trusted manufacturers such as Clorox,
Energizer, Procter & Gamble, Hanes, Coca-Cola, Mars, Unilever,
Nestle, Kimberly-Clark, Kellogg's, General Mills, and PepsiCo.
Learn more about Dollar General at www.dollargeneral.com.
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES Condensed
Consolidated Balance Sheets (In thousands)
(Unaudited)
April 29
April 30
January 28
2022
2021
2022
ASSETS Current assets: Cash and cash equivalents
$
335,613
$
688,055
$
344,829
Merchandise inventories
6,087,399
5,099,465
5,614,325
Income taxes receivable
33,576
16,637
97,394
Prepaid expenses and other current assets
280,282
237,588
247,295
Total current assets
6,736,870
6,041,745
6,303,843
Net property and equipment
4,451,028
3,999,170
4,346,127
Operating lease assets
10,183,152
9,614,974
10,092,930
Goodwill
4,338,589
4,338,589
4,338,589
Other intangible assets, net
1,199,720
1,199,840
1,199,750
Other assets, net
46,949
42,380
46,132
Total assets
$
26,956,308
$
25,236,698
$
26,327,371
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
Current portion of long-term obligations
$
900,635
$
-
$
-
Current portion of operating lease liabilities
$
1,205,043
$
1,101,369
$
1,183,559
Accounts payable
3,906,852
3,294,423
3,738,604
Accrued expenses and other
930,260
861,653
1,049,139
Income taxes payable
9,051
57,953
8,055
Total current liabilities
6,951,841
5,315,398
5,979,357
Long-term obligations
3,947,462
4,130,710
4,172,068
Long-term operating lease liabilities
8,959,174
8,499,442
8,890,709
Deferred income taxes
907,020
769,430
825,254
Other liabilities
229,187
271,793
197,997
Total liabilities
20,994,684
18,986,773
20,065,385
Commitments and contingencies Shareholders' equity:
Preferred stock
-
-
-
Common stock
198,623
206,680
201,265
Additional paid-in capital
3,606,414
3,457,160
3,587,914
Retained earnings
2,157,589
2,588,006
2,473,999
Accumulated other comprehensive loss
(1,002
)
(1,921
)
(1,192
)
Total shareholders' equity
5,961,624
6,249,925
6,261,986
Total liabilities and shareholders' equity
$
26,956,308
$
25,236,698
$
26,327,371
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES Condensed
Consolidated Statements of Income (In thousands, except per
share amounts) (Unaudited)
For the Quarter Ended
April 29
% of Net
April 30
% of Net
2022
Sales
2021
Sales
Net sales
$
8,751,352
100.00
%
$
8,400,964
100.00
%
Cost of goods sold
6,012,989
68.71
5,645,296
67.20
Gross profit
2,738,363
31.29
2,755,668
32.80
Selling, general and administrative expenses
1,992,206
22.76
1,846,818
21.98
Operating profit
746,157
8.53
908,850
10.82
Interest expense
39,676
0.45
40,392
0.48
Income before income taxes
706,481
8.07
868,458
10.34
Income tax expense
153,824
1.76
190,709
2.27
Net income
$
552,657
6.32
%
$
677,749
8.07
%
Earnings per
share: Basic
$
2.42
$
2.84
Diluted
$
2.41
$
2.82
Weighted average shares outstanding: Basic
228,477
238,548
Diluted
229,609
240,301
DOLLAR GENERAL CORPORATION AND
SUBSIDIARIES Condensed Consolidated Statements of Cash
Flows (In thousands) (Unaudited) For
the 13 Weeks Ended
April 29
April 30
2022
2021
Cash flows from operating activities: Net income
$
552,657
$
677,749
Adjustments to reconcile net income to net cash from operating
activities: Depreciation and amortization
172,563
154,146
Deferred income taxes
81,679
58,794
Noncash share-based compensation
26,945
23,533
Other noncash (gains) and losses
68,585
13,040
Change in operating assets and liabilities: Merchandise inventories
(538,921
)
135,732
Prepaid expenses and other current assets
(34,482
)
(41,831
)
Accounts payable
172,110
(295,206
)
Accrued expenses and other liabilities
(116,384
)
(136,743
)
Income taxes
64,814
116,013
Other
(50
)
(2,236
)
Net cash provided by (used in) operating activities
449,516
702,991
Cash flows from investing
activities: Purchases of property and equipment
(281,580
)
(277,730
)
Proceeds from sales of property and equipment
736
807
Net cash provided by (used in) investing activities
(280,844
)
(276,923
)
Cash flows from financing activities: Issuance of
long-term obligations
-
-
Repayments of long-term obligations
(3,034
)
(1,753
)
Net increase (decrease) in commercial paper outstanding
705,300
-
Borrowings under revolving credit facilities
-
-
Repayments of borrowings under revolving credit facilities
-
-
Costs associated with issuance of debt
-
-
Repurchases of common stock
(746,773
)
(1,000,352
)
Payments of cash dividends
(125,262
)
(99,832
)
Other equity and related transactions
(8,119
)
(12,653
)
Net cash provided by (used in) financing activities
(177,888
)
(1,114,590
)
Net increase (decrease) in cash and cash equivalents
(9,216
)
(688,522
)
Cash and cash equivalents, beginning of period
344,829
1,376,577
Cash and cash equivalents, end of period
$
335,613
$
688,055
Supplemental cash flow information: Cash paid
for: Interest
$
52,349
$
55,858
Income taxes
$
7,226
$
15,801
Supplemental schedule of non-cash investing and financing
activities: Right of use assets obtained in exchange for new
operating lease liabilities
$
396,628
$
417,749
Purchases of property and equipment awaiting processing for
payment, included in Accounts payable
$
141,202
$
93,599
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES Selected
Additional Information (Unaudited)
Sales by Category (in thousands) For the Quarter
Ended
April 29
April 30
2022
2021
% Change
Consumables
$
6,960,501
$
6,378,135
9.1
%
Seasonal
961,378
1,050,382
-8.5
%
Home products
539,822
571,315
-5.5
%
Apparel
289,651
401,132
-27.8
%
Net sales
$
8,751,352
$
8,400,964
4.2
%
Store Activity
For the Quarter Ended
April 29
April 30
2022
2021
Beginning store count
18,130
17,177
New store openings
239
260
Store closings
(13
)
(11
)
Net new stores
226
249
Ending store count
18,356
17,426
Total selling square footage (000's)
136,466
128,953
Growth rate (square footage)
5.8
%
5.8
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220526005074/en/
Investor Contacts: Donny Lau, (615) 855-5591 Kevin Walker, (615)
855-4954 Media Contacts: Jennifer Moreau, (877) 944-3477 Crystal
Luce, (615) 855-5210
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