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Aug. 26, 2021, 6:55 a.m. EDT

Dollar General Corporation Reports Second Quarter 2021 Results

Updates Financial Guidance for Fiscal Year 2021

GOODLETTSVILLE, Tenn., (BUSINESS WIRE) -- Dollar General Corporation /zigman2/quotes/200691429/composite DG -0.27% today reported financial results for its fiscal year 2021 second quarter (13 weeks) ended July 30, 2021.

  • Net Sales Decreased 0.4% to $8.7 Billion

  • Same-Store Sales Decreased 4.7%; Increased 14.1% on a two-year stack basis [1]

  • Operating Profit of $849.6 Million, or 9.8% as a percentage of net sales

  • Diluted Earnings Per Share (“EPS”) of $2.69, representing a two-year compound annual growth rate of 27.7%, or 24.3% compared to Q2 2019 Adjusted Diluted EPS [2]

  • Year to Date Cash Flows From Operations of $1.3 Billion

  • Board of Directors Declares Quarterly Cash Dividend of $0.42 per share

1 Same-store sales on a two-year stack basis represents the sum of the Q2 2021 same-store sales decrease and the Q2 2020 same-store sales increase. [2 See Reconciliation of Non-GAAP Adjusted Diluted Earnings Per Share for reconciliation of Q2 2019 Adjusted Diluted EPS to Q2 2019 Diluted EPS; see also “Non-GAAP Disclosure” herein. ]

“We are pleased with our second quarter results, and remain grateful to our associates for their dedication to fulfilling our mission of Serving Others,” said Todd Vasos, Dollar General’s chief executive officer. “Despite what remains a challenging operating environment, including additional uncertainties brought on by the Delta variant and pressures on the global supply chain, our team has continued to successfully adapt and deliver for our customers.”

“During the quarter, we made significant progress on many key initiatives, including the completion of our initial rollout of DG Fresh and the opening of our first pOpshelf store-within-a-store concept. In addition, we executed more than 750 real estate projects, including new store openings in our pOpshelf concept and larger footprint Dollar General formats. We remain focused on delivering value and convenience for our customers, while driving long-term sustainable growth and value for our shareholders. We feel very good about the underlying strength of the business, and we are excited about our plans for the second half of fiscal 2021.”

Second Quarter 2021 Highlights Net sales decreased 0.4% to $8.7 billion in the second quarter of 2021 compared to $8.7 billion in the second quarter of 2020. The net sales decrease was primarily driven by a decline in same-store sales, as well as the impact of store closures, partially offset by positive sales contributions from new stores. Same-store sales decreased 4.7% compared to the second quarter of 2020, driven by a decline in customer traffic, partially offset by an increase in average transaction amount. Same-store sales in the second quarter of 2021 included a decline in each of the consumables, seasonal, apparel, and home products categories.

Gross profit as a percentage of net sales was 31.6% in the second quarter of 2021 compared to 32.5% in the second quarter of 2020, a decrease of 80 basis points. This gross profit rate decrease was primarily attributable to increased transportation costs, an increased LIFO provision, a greater proportion of sales coming from the consumables category, which generally has a lower gross profit rate than other product categories, and an increase in inventory damages. These factors were partially offset by higher inventory markups and a reduction in inventory shrink as a percentage of net sales.

Selling, general and administrative expenses (“SG&A”) as a percentage of net sales were 21.8% in the second quarter of 2021 compared to 20.4% in the second quarter of 2020, an increase of 138 basis points. Among the expenses that were greater as a percentage of net sales in the current year period were retail labor, store occupancy costs, employee benefits, depreciation and amortization, utilities, workers’ compensation and general liability expenses, and taxes and licenses, partially offset by lower incentive compensation expense.

Operating profit for the second quarter of 2021 decreased 18.5% to $849.6 million compared to $1.0 billion in the second quarter of 2020. The second quarter of 2020 included approximately $38 million of incremental investments the Company made in response to the COVID-19 pandemic, primarily driven by $13 million in frontline employee appreciation bonuses, as well as measures taken to further protect the health and safety of employees and customers.

The effective income tax rate in the second quarter of 2021 was 21.4% compared to 21.5% in the second quarter of 2020. This lower effective income tax rate was primarily due to a greater impact of permanent differences resulting from a decrease in pre-tax income for the 2021 period compared to the 2020 period.

The Company reported net income of $637.0 million for the second quarter of 2021, a decrease of 19.1% compared to $787.6 million in the second quarter of 2020. Diluted EPS decreased 13.8% to $2.69 for the second quarter of 2021 compared to diluted EPS of $3.12 in the second quarter of 2020.

Merchandise Inventories As of July 30, 2021, total merchandise inventories, at cost, were $5.3 billion compared to $4.4 billion as of July 31, 2020, an increase of 13.7% on a per-store basis. This increase compares to a 5.9% decrease in merchandise inventories, at cost, on a per-store basis in the second quarter of 2020.

Capital Expenditures Total additions to property and equipment in the 26-week period ended July 30, 2021 were $518 million, including approximately: $248 million for improvements, upgrades, remodels and relocations of existing stores; $126 million for distribution and transportation related projects; $125 million for store facilities, primarily for leasehold improvements as well as fixtures and equipment in new stores; and $19 million for information systems upgrades and technology-related projects. During the second quarter of 2021, the Company opened 270 new stores, remodeled 477 stores and relocated 25 stores.

Share Repurchases In the second quarter of 2021, the Company repurchased $700 million of its common stock, or 3.3 million shares, at an average price of $211.44 per share, under its share repurchase program. The total remaining authorization for future repurchases was $979 million at the end of the second quarter of 2021. 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 August 25, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.42 per share on the Company’s common stock, payable on or before October 19, 2021 to shareholders of record on October 5, 2021. 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 2021 Financial Guidance and Store Growth Outlook Significant uncertainty continues to exist regarding the severity and duration of the COVID-19 pandemic, including its impact on the U.S. economy, consumer behavior and the Company’s business, which makes it difficult for the Company to predict specific financial outcomes for the fiscal year ending January 28, 2022 (“fiscal year 2021”). In addition, such outcomes could be impacted by several variables, which include, but are not limited to, any additional government stimulus payments, economic recovery, employment levels, COVID-19 vaccine status, further disruptions to the global supply chain, and the ongoing impact of the COVID-19 pandemic, including new variants of concern and any corresponding governmental measures such as closures of schools or businesses.

Despite this uncertainty and an expected increase in transportation and distribution costs for the remainder of fiscal 2021, the Company is updating its financial guidance issued on May 27, 2021 as a result of its strong results in the first half of the year.

For fiscal year 2021, the Company now expects the following:

  • Net sales growth of 0.5% to 1.5%; compared to its previous expectation in the range of a 1% decline to an increase of 1%;

  • Same-store sales decline of 3.5% to 2.5%, which reflects growth of approximately 13% to 14% on a two-year stack basis [3] ; compared to its previous expectation of a decline of 5% to 3%;

  • Diluted EPS in the range of $9.60 to $10.20, which reflects a compound annual growth rate in the range of 20% to 24% (or in the range of approximately 19% to 23% compared to 2019 Adjusted diluted EPS) over a two-year period [4] ; compared to its previous expectation in the range of $9.50 to $10.20

  • Share repurchases of approximately $2.4 billion; compared to its previous expectation of approximately $2.2 billion

  • Capital expenditures, including those related to investments in the Company’s strategic initiatives, in the range of $1.1 billion to $1.2 billion, compared to its previous expected range of $1.05 billion to $1.15 billion.

In addition, the Company is reiterating its plans to execute 2,900 real estate projects in fiscal year 2021, including 1,050 new store openings, 1,750 store remodels, and 100 store relocations.

3 Same-store sales on a two-year stack basis represents the sum of actual 2020 same-store sales and the corresponding low and high ends of the 2021 guidance range. 4 Two-year compound annual growth rates utilize 2019 diluted EPS and 2019 Adjusted diluted EPS (see “Non-GAAP Disclosure” herein) as the base.

Conference Call Information The Company will hold a conference call on August 26, 2021 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 13720935. 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 September 23, 2021, and will be accessible via webcast replay or by calling (877) 660-6853. The conference ID for the telephonic replay is 13720935.

Non-GAAP Disclosure Adjusted diluted EPS, and its respective growth metric, for the 2019 second quarter ended August 2, 2019, and fiscal year ended January 31, 2020 has not been derived in accordance with U.S. GAAP, but rather excludes the impact of significant legal expenses associated with wage and hour and consumer/product certified class action litigation and related matters. Due to the nature, infrequency, and financial magnitude of such matters, the Company believes this non-GAAP financial measure provides useful information to investors in assessing the Company’s operating performance as this measure provides an additional relevant comparison of the Company’s operating performance across periods. A reconciliation of this non-GAAP measure to the most directly comparable measure calculated in accordance with GAAP is provided in the accompanying schedules.

The non-GAAP measure discussed above is not a measure of financial performance or condition, liquidity or profitability in accordance with GAAP, and should not be considered as an alternative to diluted EPS or any other measure derived in accordance with GAAP. This non-GAAP measure has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company’s financial results as reported in accordance with GAAP. Because not all companies use identical calculations, this presentation may not be comparable to other similarly titled measures of other companies.

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 2021 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,” “expect,” “estimate,” “forecast,” “predict,” “position,” “assume,” “opportunities,” “intend,” “continue,” “future,” “ongoing,” “potential,” “long-term,” “guidance,” “goal,” “outcome,” “uncertainty,” “look to,” “looking ahead,” “subject to,” “committed,” “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:

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 17,683 stores in 46 states as of July 30, 2021. 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)
July 30   July 31   January 29
2021   2020   2021
ASSETS
Current assets:
Cash and cash equivalents $ 313,666   $ 2,959,604   $ 1,376,577  
Merchandise inventories   5,279,273     4,391,157     5,247,477  
Income taxes receivable   127,011     36,176     90,760  
Prepaid expenses and other current assets   272,768     210,471     199,405  
Total current assets   5,992,718     7,597,408     6,914,219  
Net property and equipment   4,104,193     3,520,998     3,899,997  
Operating lease assets   9,805,081     9,154,789     9,473,330  
Goodwill   4,338,589     4,338,589     4,338,589  
Other intangible assets, net   1,199,810     1,199,931     1,199,870  
Other assets, net   47,417     35,718     36,619  
Total assets $ 25,487,808   $ 25,847,433   $ 25,862,624  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of operating lease liabilities $ 1,127,841   $ 1,015,733   $ 1,074,079  
Accounts payable   3,369,984     3,400,642     3,614,089  
Accrued expenses and other   973,025     978,567     1,006,552  
Income taxes payable   8,234     16,246     16,063  
Total current liabilities   5,479,084     5,411,188     5,710,783  
Long-term obligations   4,156,765     4,089,001     4,130,975  
Long-term operating lease liabilities   8,661,716     8,124,884     8,385,388  
Deferred income taxes   781,477     689,893     710,549  
Other liabilities   271,631     176,396     263,691  
Total liabilities   19,350,673     18,491,362     19,201,386  
 
Commitments and contingencies
 
Shareholders' equity:
Preferred stock   -     -     -  
Common stock   204,142     217,906     210,687  
Additional paid-in capital   3,504,850     3,381,819     3,446,612  
Retained earnings   2,429,821     3,758,995     3,006,102  
Accumulated other comprehensive loss   (1,678 )   (2,649 )   (2,163 )
Total shareholders' equity   6,137,135     7,356,071     6,661,238  
Total liabilities and shareholders' equity $ 25,487,808   $ 25,847,433   $ 25,862,624  
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
 
For the Quarter Ended
July 30 % of Net   July 31 % of Net
2021 Sales   2020 Sales
Net sales $ 8,650,198 100.00 % $ 8,684,241 100.00 %
Cost of goods sold   5,912,539 68.35   5,866,006 67.55
Gross profit   2,737,659 31.65   2,818,235 32.45
Selling, general and administrative expenses   1,888,091 21.83   1,775,608 20.45
Operating profit   849,568 9.82   1,042,627 12.01
Interest expense   39,430 0.46   39,326 0.45
Income before income taxes   810,138 9.37   1,003,301 11.55
Income tax expense   173,119 2.00   215,700 2.48
Net income $ 637,019 7.36 % $ 787,601 9.07 %
 
Earnings per share:
Basic $ 2.71 $ 3.15
Diluted $ 2.69 $ 3.12
Weighted average shares outstanding:
Basic   234,924   250,281
Diluted   236,406   252,190
 
 
For the 26 Weeks Ended
July 30 % of Net   July 31 % of Net
2021 Sales   2020 Sales
Net sales $ 17,051,162 100.00 % $ 17,132,690 100.00 %
Cost of goods sold   11,557,835 67.78   11,718,763 68.40
Gross profit   5,493,327 32.22   5,413,927 31.60
Selling, general and administrative expenses   3,734,909 21.90   3,504,516 20.46
Operating profit   1,758,418 10.31   1,909,411 11.14
Interest expense   79,822 0.47   69,819 0.41
Income before income taxes   1,678,596 9.84   1,839,592 10.74
Income tax expense   363,828 2.13   401,545 2.34
Net income $ 1,314,768 7.71 % $ 1,438,047 8.39 %
 
Earnings per share:
Basic $ 5.55 $ 5.73
Diluted $ 5.52 $ 5.69
Weighted average shares outstanding:
Basic   236,736   251,031
Diluted   238,354   252,908
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
For the 26 Weeks Ended
July 30   July 31
2021   2020
Cash flows from operating activities:
Net income $ 1,314,768   $ 1,438,047  
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization   312,682     278,617  
Deferred income taxes   70,755     14,493  
Noncash share-based compensation   39,903     34,477  
Other noncash (gains) and losses   51,036     6,177  
Change in operating assets and liabilities:
Merchandise inventories   (80,038 )   283,957  
Prepaid expenses and other current assets   (72,072 )   (27,237 )
Accounts payable   (245,382 )   560,918  
Accrued expenses and other liabilities   (25,479 )   273,208  
Income taxes   (44,080 )   48,245  
Other   (4,549 )   (3,567 )
Net cash provided by (used in) operating activities   1,317,544     2,907,335  
 
Cash flows from investing activities:
Purchases of property and equipment   (518,466 )   (424,167 )
Proceeds from sales of property and equipment   1,805     1,051  
Net cash provided by (used in) investing activities   (516,661 )   (423,116 )
 
Cash flows from financing activities:
Issuance of long-term obligations   -     1,494,315  
Repayments of long-term obligations   (2,936 )   (1,037 )
Net increase (decrease) in commercial paper outstanding   18,400     (425,200 )
Borrowings under revolving credit facilities   -     300,000  
Repayments of borrowings under revolving credit facilities   -     (300,000 )
Costs associated with issuance of debt   -     (13,574 )
Repurchases of common stock   (1,700,148 )   (664,616 )
Payments of cash dividends   (198,107 )   (180,268 )
Other equity and related transactions   18,997     25,445  
Net cash provided by (used in) financing activities   (1,863,794 )   235,065  
 
Net increase (decrease) in cash and cash equivalents   (1,062,911 )   2,719,284  
Cash and cash equivalents, beginning of period   1,376,577     240,320  
Cash and cash equivalents, end of period $ 313,666   $ 2,959,604  
 
Supplemental cash flow information:
Cash paid for:
Interest $ 79,054   $ 49,497  
Income taxes $ 336,100   $ 338,678  
Supplemental schedule of non-cash investing and financing activities:
Right of use assets obtained in exchange for new operating lease liabilities $ 893,773   $ 869,137  
Purchases of property and equipment awaiting processing for payment,
included in Accounts payable $ 119,336   $ 89,290  
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Selected Additional Information
(Unaudited)
 
 
Sales by Category (in thousands)
 
For the Quarter Ended
July 30   July 31    
2021   2020   % Change
Consumables $ 6,612,950 $ 6,496,350   1.8 %
Seasonal   1,090,311   1,161,611   -6.1 %
Home products   561,190   586,021   -4.2 %
Apparel   385,747   440,259   -12.4 %
Net sales $ 8,650,198 $ 8,684,241   -0.4 %
 
 
For the 26 Weeks Ended
July 30   July 31    
2021   2020   % Change
Consumables $ 12,991,085 $ 13,199,799   -1.6 %
Seasonal   2,140,693   2,079,523   2.9 %
Home products   1,132,505   1,084,303   4.4 %
Apparel   786,879   769,065   2.3 %
Net sales $ 17,051,162 $ 17,132,690   -0.5 %
 
 
 
 
Store Activity
 
For the 26 Weeks Ended
July 30   July 31
2021   2020
 
Beginning store count   17,177   16,278  
New store openings   530   500  
Store closings   (24 ) (58 )
Net new stores   506   442  
Ending store count   17,683   16,720  
Total selling square footage (000's)   130,901   123,601  
Growth rate (square footage)   5.9 % 5.5 %
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP Adjusted Diluted Earnings Per Share
(Unaudited)
 
(in millions, except per share amounts)
 
For the Year Ended   For the Quarter Ended For the Quarter Ended  
January 31   August 2 July 30 Compound Annual
2020   2019 2021 Growth Rate
 
Net income $ 1,712.6   $ 426.6   $ 637.0
 
Significant Legal Expenses   31.0     31.0     -
Deferred tax benefit of Significant Legal Expenses   (6.9 )   (6.9 )   -
Significant Legal Expenses net of deferred tax benefit   24.1     24.1     -
 
Adjusted net income $ 1,736.7   $ 450.7   $ 637.0
 
Diluted earnings per share:
As reported $ 6.64   $ 1.65   $ 2.69 27.7 %
After-tax impact of Significant Legal Expenses   0.09     0.09     -
Adjusted $ 6.73   $ 1.74   $ 2.69 24.3 %
 
Weighted average diluted shares outstanding:   258.1     259.1     236.4

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210826005142/en/

SOURCE: Dollar General Corporation

Investor Contacts:
Donny Lau, (615) 855-5591
Kevin Walker, (615) 855-4954

Media Contacts:
Jennifer Moreau, (877) 944-3477
Crystal Luce, (615) 855-5210

COMTEX_392237789/2456/2021-08-26T06:55:10

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/zigman2/quotes/200691429/composite
US : U.S.: NYSE
$ 213.13
-0.57 -0.27%
Volume: 257,472
Oct. 19, 2021 12:08p
P/E Ratio
20.40
Dividend Yield
0.79%
Market Cap
$49.86 billion
Rev. per Employee
$213,588
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