press release

May 27, 2021, 6:55 a.m. EDT

Dollar General Corporation Reports First Quarter 2021 Results

Raises Financial Guidance for Fiscal Year 2021

Dollar General Corporation /zigman2/quotes/200691429/composite DG +0.06% today reported financial results for its fiscal year 2021 first quarter (13 weeks) ended April 30, 2021.

  • Net Sales Decreased 0.6% to $8.4 Billion

  • Same-Store Sales Decreased 4.6%; Increased 17.1% on a two-year stack basis [1]

  • Operating Profit Increased 4.9% to $908.9 Million

  • Diluted Earnings Per Share (“EPS”) Increased 10.2% to $2.82

  • Cash Flows From Operations of $703.0 Million

  • 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 Q1 2021 same-store sales decrease and the Q1 2020 same-store sales increase.

“We are pleased with our strong start to fiscal 2021, and I want to thank our associates for their unwavering commitment to supporting our customers, communities, and each other,” said Todd Vasos, Dollar General’s chief executive officer. “As a testament to their efforts, our first-quarter results exceeded our expectations, reflecting strong underlying performance across the business, which we believe was enhanced by the most recent round of government stimulus payment. Given our first-quarter outperformance, we are raising our financial outlook for fiscal 2021.”

“During the first quarter, we executed more than 800 real estate projects, including new store openings in our pOpshelf and larger footprint Dollar General formats. In addition, we remained focused on serving our customers, while further advancing our key strategic initiatives. Looking ahead, we are excited about our plans and believe we are well-positioned to continue delivering long-term sustainable growth and value for our shareholders.”

First Quarter 2021 Highlights Net sales decreased 0.6% to $8.4 billion in the first quarter of 2021 compared to $8.4 billion in the first 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 4.6% compared to the first quarter of 2020, driven by a decline in customer traffic, partially offset by an increase in average transaction amount. Same-store sales in the first quarter of 2021 included a decline in the consumables category, partially offset by growth in the seasonal, apparel, and home products categories. The Company believes consumer behavior driven by government stimulus payments had a significant positive effect on sales in its non-consumable product categories.

Gross profit as a percentage of net sales was 32.8% in the first quarter of 2021 compared to 30.7% in the first quarter of 2020, an increase of 208 basis points. This gross profit rate increase was primarily attributable to higher initial markups on inventory purchases; a reduction in markdowns as a percentage of net sales; a greater proportion of sales coming from the non-consumables product categories, which generally have a higher gross profit rate than the consumables product category; and a reduction in inventory shrink as a percentage of net sales. These factors were partially offset by increased transportation costs, which were primarily impacted by higher transportation rates. In light of the significant increase in sales within its non-consumable product categories, the Company believes consumer behavior driven by government stimulus payments also had a significant positive effect on gross profit dollars.

Selling, general and administrative expenses (“SG&A”) as a percentage of net sales were 22.0% in the first quarter of 2021 compared to 20.5% in the first quarter of 2020, an increase of 152 basis points. Among the expenses that were greater as a percentage of net sales in the current year period were store occupancy costs, disaster expenses related to Winter Storm Uri, retail labor, depreciation and amortization, administrative compensation (driven by share-based compensation), utilities, and taxes and licenses.

Operating profit for the first quarter of 2021 increased 4.9% to $908.9 million compared to $866.8 million in the first quarter of 2020. The first quarter of 2020 included approximately $80 million of incremental investments the Company made in response to the COVID-19 pandemic, primarily driven by $60 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 first quarter of 2021 was 22.0% compared to 22.2% in the first quarter of 2020. This lower effective income tax rate was primarily due to increased tax benefits associated with share-based compensation in the 2021 period compared to the 2020 period.

The Company reported net income of $677.7 million for the first quarter of 2021, an increase of 4.2% compared to $650.4 million in the first quarter of 2020. Diluted EPS increased 10.2% to $2.82 for the first quarter of 2021 compared to diluted EPS of $2.56 in the first quarter of 2020.

Merchandise Inventories As of April 30, 2021, total merchandise inventories, at cost, were $5.1 billion compared to $4.1 billion as of May 1, 2020, an increase of 17.6% on a per-store basis. This increase compares to a 5.5% decrease in merchandise inventories, at cost, on a per-store basis in the first quarter of 2020.

Capital Expenditures Total additions to property and equipment in the first quarter of 2021 were $278 million, including approximately: $126 million for improvements, upgrades, remodels and relocations of existing stores; $74 million for store facilities, primarily for leasehold improvements as well as fixtures and equipment in new stores; $66 million for distribution and transportation related projects; and $11 million for information systems upgrades and technology-related projects. During the first quarter of 2021, the Company opened 260 new stores, remodeled 543 stores and relocated 33 stores.

Share Repurchases In the first quarter of 2021, the Company repurchased $1.0 billion of its common stock, or 5.0 million shares, at an average price of $201.74 per share, under its share repurchase program. The total remaining authorization for future repurchases was $1.7 billion at the end of the first 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 May 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 July 20, 2021 to shareholders of record on July 6, 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 As noted above, the Company believes its first quarter results were positively impacted by consumer behavior related to government stimulus payments. Nonetheless, 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, and the ongoing impact of the COVID-19 pandemic.

However, to reflect the strong results in the first quarter, which exceeded the Company’s expectations, the Company is updating its financial guidance issued on March 18, 2021.

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

  • Net sales in the range of a 1% decline to an increase of 1%; compared to its previous expectation in the range of a 2% decline to flat

  • Same-store sales decline of 5% to 3%, which reflects growth of approximately 11% to 13% on a two-year stack basis [2] ; compared to its previous expectation of a decline of 6% to 4%

  • Diluted EPS in the range of $9.50 to $10.20, which reflects a compound annual growth rate in the range of approximately 20% to 24% (or in the range of approximately 19% to 23% compared to 2019 Adjusted diluted EPS) over a two-year period [3] ; compared to its previous expectation in the range of $8.80 to $9.50

  • Share repurchases of approximately $2.2 billion; compared to its previous expectation of approximately $1.8 billion

In addition, the Company continues to expect capital expenditures, including those related to investments in the Company’s strategic initiatives, in the range of $1.05 billion to $1.15 billion.

The Company is also 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.

[2] 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.
[3] 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 May 27, 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 13718757. 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 24, 2021, and will be accessible via webcast replay or by calling (877) 660-6853. The conference ID for the telephonic replay is 13718757.

Non-GAAP Disclosure Adjusted diluted EPS, and its respective growth metric, for the 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 strategy, plans, intentions or beliefs about future occurrences or results. These matters involve risks, uncertainties and other factors that may cause the actual performance of the Company to differ materially from that 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 the Company’s 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 to reflect events or circumstances arising after the date on which they were made, 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 17,426 stores in 46 states as of April 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)  
  April 30 May 1 January 29
  2021 2020 2021
ASSETS
Current assets:
Cash and cash equivalents $ 688,055   $ 2,673,912   $ 1,376,577  
Merchandise inventories   5,099,465     4,107,331     5,247,477  
Income taxes receivable   16,637     17,191     90,760  
Prepaid expenses and other current assets   237,588     194,049     199,405  
Total current assets   6,041,745     6,992,483     6,914,219  
Net property and equipment   3,999,170     3,320,141     3,899,997  
Operating lease assets   9,614,974     8,960,805     9,473,330  
Goodwill   4,338,589     4,338,589     4,338,589  
Other intangible assets, net   1,199,840     1,199,961     1,199,870  
Other assets, net   42,380     36,334     36,619  
Total assets $ 25,236,698   $ 24,848,313   $ 25,862,624  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of operating lease liabilities $ 1,101,369   $ 991,054   $ 1,074,079  
Accounts payable   3,294,423     2,954,361     3,614,089  
Accrued expenses and other   861,653     791,368     1,006,552  
Income taxes payable   57,953     105,865     16,063  
Total current liabilities   5,315,398     4,842,648     5,710,783  
Long-term obligations   4,130,710     3,967,801     4,130,975  
Long-term operating lease liabilities   8,499,442     7,956,759     8,385,388  
Deferred income taxes   769,430     700,098     710,549  
Other liabilities   271,793     171,553     263,691  
Total liabilities   18,986,773     17,638,859     19,201,386  
 
Commitments and contingencies
 
Shareholders' equity:
Preferred stock   -     -     -  
Common stock   206,680     220,259     210,687  
Additional paid-in capital   3,457,160     3,332,283     3,446,612  
Retained earnings   2,588,006     3,659,804     3,006,102  
Accumulated other comprehensive loss   (1,921 )   (2,892 )   (2,163 )
Total shareholders' equity   6,249,925     7,209,454     6,661,238  
Total liabilities and shareholders' equity $ 25,236,698   $ 24,848,313   $ 25,862,624  
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
           
  For the Quarter Ended
  April 30 % of Net   May 1 % of Net
  2021 Sales   2020 Sales
Net sales $ 8,400,964 100.00 %   $ 8,448,449 100.00 %
Cost of goods sold   5,645,296 67.20       5,852,757 69.28  
Gross profit   2,755,668 32.80       2,595,692 30.72  
Selling, general and administrative expenses   1,846,818 21.98       1,728,908 20.46  
Operating profit   908,850 10.82       866,784 10.26  
Interest expense   40,392 0.48       30,493 0.36  
Income before income taxes   868,458 10.34       836,291 9.90  
Income tax expense   190,709 2.27       185,845 2.20  
Net income $ 677,749 8.07 %   $ 650,446 7.70 %
   
Earnings per share:  
Basic $ 2.84   $ 2.58
Diluted $ 2.82   $ 2.56
Weighted average shares outstanding:  
Basic   238,548     251,780
Diluted   240,301     253,627
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
     
  For the 13 Weeks Ended
  April 30 May 1
  2021 2020
Cash flows from operating activities:
Net income $ 677,749   $ 650,446  
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization   154,146     137,655  
Deferred income taxes   58,794     24,784  
Noncash share-based compensation   23,533     18,968  
Other noncash (gains) and losses   13,040     1,569  
Change in operating assets and liabilities:
Merchandise inventories   135,732     567,902  
Prepaid expenses and other current assets   (41,831 )   (12,000 )
Accounts payable   (295,206 )   110,126  
Accrued expenses and other liabilities   (136,743 )   81,113  
Income taxes   116,013     156,849  
Other   (2,236 )   (1,086 )
Net cash provided by (used in) operating activities   702,991     1,736,326  
 
Cash flows from investing activities:
Purchases of property and equipment   (277,730 )   (195,434 )
Proceeds from sales of property and equipment   807     466  
Net cash provided by (used in) investing activities   (276,923 )   (194,968 )
 
Cash flows from financing activities:
Issuance of long-term obligations   -     1,494,315  
Repayments of long-term obligations   (1,753 )   (555 )
Net increase (decrease) in commercial paper outstanding   -     (425,200 )
Borrowings under revolving credit facilities   -     300,000  
Repayments of borrowings under revolving credit facilities   -     (300,000 )
Costs associated with issuance of debt   -     (13,623 )
Repurchases of common stock   (1,000,352 )   (63,080 )
Payments of cash dividends   (99,832 )   (90,617 )
Other equity and related transactions   (12,653 )   (9,006 )
Net cash provided by (used in) financing activities   (1,114,590 )   892,234  
 
Net increase (decrease) in cash and cash equivalents   (688,522 )   2,433,592  
Cash and cash equivalents, beginning of period   1,376,577     240,320  
Cash and cash equivalents, end of period $ 688,055   $ 2,673,912  
 
Supplemental cash flow information:
Cash paid for:
Interest $ 55,858   $ 48,339  
Income taxes $ 15,801   $ 4,154  
Supplemental schedule of non-cash investing and financing activities:
Right of use assets obtained in exchange for new operating lease liabilities $ 417,749   $ 418,239  
Purchases of property and equipment awaiting processing for payment, included in Accounts payable $ 93,599   $ 93,801  
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Selected Additional Information
(Unaudited)
   
Sales by Category (in thousands)
   
For the Quarter Ended  
April 30   May 1  
2021   2020 % Change
Consumables $ 6,378,135   $ 6,703,449   -4.9 %
Seasonal   1,050,382     917,912   14.4 %
Home products   571,315     498,282   14.7 %
Apparel   401,132     328,806   22.0 %
Net sales $ 8,400,964   $ 8,448,449   -0.6 %
   
   
   
   
   
Store Activity
   
  For the Quarter Ended
  April 30 May 1
  2021 2020
   
Beginning store count     17,177   16,278  
New store openings     260   250  
Store closings     (11 ) (28 )
Net new stores     249   222  
Ending store count     17,426   16,500  
Total selling square footage (000's)     128,953   121,930  
Growth rate (square footage)     5.8 % 5.6 %
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
January 31
2020
 
Net income $ 1,712.6  
 
Significant Legal Expenses   31.0  
Deferred tax benefit of Significant Legal Expenses   (6.9 )
Significant Legal Expenses net of deferred tax benefit   24.1  
 
Adjusted net income $ 1,736.7  
 
Diluted earnings per share:
As reported $ 6.64  
After-tax impact of Significant Legal Expenses   0.09  
Adjusted $ 6.73  
 
Weighted average diluted shares outstanding:   258.1  

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210527005255/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_387387237/2456/2021-05-27T06:55:10

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/zigman2/quotes/200691429/composite
US : U.S.: NYSE
$ 230.29
+0.14 +0.06%
Volume: 755,128
July 28, 2021 3:14p
P/E Ratio
21.19
Dividend Yield
0.73%
Market Cap
$54.36 billion
Rev. per Employee
$213,588
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