On May 30, 2024, Dollar General Corp (DG, Financial) released its 8-K filing reporting financial results for the first quarter of fiscal year 2024, which ended on May 3, 2024. Dollar General, with over 20,000 locations, serves as a convenient shopping destination across rural America, offering a wide range of consumable items and other merchandise at low prices.
Performance Overview
Dollar General Corp (DG, Financial) reported net sales of $9.9 billion for Q1 2024, a 6.1% increase from $9.3 billion in Q1 2023. This growth was driven by new store openings and a 2.4% increase in same-store sales, despite a decrease in the average transaction amount. However, the company faced challenges with increased shrink and inventory markdowns, leading to a gross profit margin decline to 30.2% from 31.6% in the same period last year.
Financial Achievements and Challenges
Despite the revenue growth, Dollar General's operating profit decreased by 26.3% to $546.1 million, compared to $740.9 million in Q1 2023. Net income also fell by 29.4% to $363.3 million, resulting in a diluted EPS of $1.65, which is below the analyst estimate of $1.56. The company attributed the decline in profitability to higher SG&A expenses, which rose to 24.7% of net sales from 23.7% in the previous year, driven by increased retail labor, depreciation, and other costs.
Key Financial Metrics
| Metric | Q1 2024 | Q1 2023 | % Change |
|---|---|---|---|
| Net Sales | $9.9 billion | $9.3 billion | 6.1% |
| Gross Profit Margin | 30.2% | 31.6% | -1.4% |
| Operating Profit | $546.1 million | $740.9 million | -26.3% |
| Net Income | $363.3 million | $514.4 million | -29.4% |
| Diluted EPS | $1.65 | $2.34 | -29.5% |
Income Statement Highlights
Dollar General's cost of goods sold increased to $6.9 billion, representing 69.8% of net sales, up from 68.4% in Q1 2023. The company also reported a decrease in net interest expense by 12.8% to $72.4 million. The effective income tax rate rose to 23.3% from 21.8%, impacting the net income.
Balance Sheet and Cash Flow
As of May 3, 2024, Dollar General's total merchandise inventories were valued at $6.9 billion, a 9.5% decrease from the previous year. The company invested $342 million in capital expenditures, focusing on store improvements, new store facilities, and distribution projects. Despite these investments, the company did not repurchase any shares in Q1 2024, maintaining a remaining authorization of $1.4 billion for future repurchases.
Outlook and Guidance
For the second quarter of fiscal year 2024, Dollar General expects same-store sales growth in the low 2% range and diluted EPS between $1.70 and $1.85. The company reiterated its full-year financial guidance and plans to execute 2,435 real estate projects, including 730 new store openings and 1,620 remodels.
“While it is still early in our fiscal year, we are encouraged by our first quarter financial results,” said Kelly Dilts, Dollar General’s chief financial officer. “Although we are experiencing shrink and sales mix headwinds that are greater than we had initially anticipated coming into the year, we are working to mitigate the impact of these challenges and are reiterating our full-year financial guidance as we remain focused on our goal of delivering consistent, strong financial performance.”
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Dollar General Corp for further details.
