Dollar General posts strong Q4, fiscal year results
In reporting that Dollar General's fourth quarter net sales increased 4.5% to $10.3 billion, while fiscal year net sales increased 5% to $40.6 billion, CEO Todd Vasos said the company was pleased with the underlying performance of the business in the fourth quarter, including improved execution and solid top-line results.
Vasos added, “As we reflect on our full fiscal 2024 year, we believe our Back to Basics work is resonating with customers, as demonstrated by higher customer satisfaction scores and healthy market share gains. I want to thank each of our associates for their dedication to fulfilling our mission of Serving Others every day."
"Looking ahead, we believe we are well-positioned to deliver our unique combination of value and convenience at a time when our customers need it most. We have fortified the foundation of this business over the last year and are confident in our plans and initiatives for 2025 and beyond, as we look to further build on this base and create sustainable long-term value for our shareholders,” Vasos continued.
The retailer also reported that fourth quarter same-store sales increased 1.2%; fiscal year same-store sales increased 1.4%.
Dollar General said its operating profit decreased 49.2% to $294.2 million for the quarter; fiscal year operating profit decreased 29.9% to $1.7 billion.
Dollar General’s fourth quarter diluted EPS decreased 52.5% to 87 cents; fiscal year diluted EPS decreased 32.3% to $5.11.
The company reported annual cash flows from operations increased 25.3% to $3 billion
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Fourth Quarter Fiscal 2024 Highlights:
- Net sales increased 4.5% to $10.3 billion in the fourth quarter of fiscal 2024 compared to $9.9 billion in the fourth quarter of fiscal 2023. The net sales increase was driven by positive sales contributions from new stores and growth in same-store sales, partially offset by the impact of store closures, Dollar General said.
- Same-store sales increased 1.2% compared to the fourth quarter of 2023, reflecting an increase of 2.3% in average transaction amount and a decrease of 1.1% in customer traffic. Same-store sales in the fourth quarter of fiscal 2024 included growth in the consumables category, partially offset by declines in each of the seasonal, home products and apparel categories, the retailer said.
- The retailer’s gross profit as a percentage of net sales was 29.4% in the fourth quarter of fiscal 2024 compared to 29.5% in the fourth quarter of fiscal 2023, a decrease of 8 basis points. This gross profit rate decrease was driven primarily by increases in markdowns, inventory damages and distribution costs, and a greater proportion of sales coming from the consumables category; partially offset by lower shrink and higher inventory markups.
- Operating profit for the fourth quarter of fiscal 2024 decreased 49.2% to $294.2 million compared to $579.7 million in the fourth quarter of fiscal 2023. The decrease reflects fourth quarter charges totaling $232 million related to the store portfolio optimization review, the company said.
- The company reported net income of $191.2 million for the fourth quarter of fiscal 2024, a decrease of 52.4% compared to $401.8 million in the fourth quarter of fiscal 2023. Diluted EPS decreased 52.5% to 87 cents for the fourth quarter of fiscal 2024 compared to diluted EPS of $1.83 in the fourth quarter of fiscal 2023. The decrease reflects a negative impact of approximately 81 cents per share in the fourth quarter related to the store portfolio optimization review.
Fiscal Year 2024 Highlights:
- Fiscal 2024 net sales increased 5% to $40.6 billion compared to $38.7 billion in fiscal 2023. The net sales increase was primarily driven by positive sales contributions from new stores and growth in same-store sales, partially offset by the impact of store closures. Same-store sales increased 1.4% compared to fiscal 2023, reflecting increases of 1.1% in customer traffic and 0.3% in average transaction amount. Same-store sales in fiscal 2024 included growth in the consumables category, partially offset by declines in each of the home products, seasonal and apparel categories.
- Gross profit as a percentage of net sales was 29.6% in fiscal 2024, compared to 30.3% in fiscal 2023, a decrease of 70 basis points. The gross profit rate decrease in 2024 was driven primarily by increased markdowns, a greater proportion of sales coming from the consumables category and increased inventory damages; partially offset by decreased transportation costs, Dollar General said.
- Operating profit for fiscal 2024 decreased 29.9% to $1.7 billion compared to $2.4 billion in fiscal 2023. The decrease reflects fourth quarter charges totaling $232 million related to the store portfolio optimization review.
- The company reported net income of $1.1 billion for fiscal 2024, a decrease of 32.3% compared to $1.7 billion in fiscal 2023. Diluted EPS decreased 32.3% to $5.11 for fiscal 2024 compared to diluted EPS of $7.55 in fiscal year 2023. The decrease reflects a negative impact of approximately 81 cents per share in the fourth quarter related to the store portfolio optimization review.
Store Portfolio Optimization Review:
During the fourth quarter of fiscal 2024, the company initiated a store portfolio optimization review of its Dollar General and pOpshelf bannered stores, which involved identifying stores for closure or re-bannering based on an evaluation of individual store performance, expected future performance, and operating conditions, among other factors.
As a result of this review, the company plans to close 96 Dollar General stores and 45 pOpshelf stores, and convert an additional six pOpshelf stores to Dollar General stores in the first quarter of the 52-week fiscal year ending Jan. 30, 2026 (“fiscal 2025”). The company’s operating profit for the fourth of quarter of fiscal 2024 included charges of $232 million, which resulted in a negative impact to EPS of approximately 81 cents, primarily due to these store closures as well as pOpshelf impairment charges.
“As we look to build on the substantial progress we made on our Back to Basics work in fiscal 2024, we believe this review was appropriate to further strengthen the foundation of our business,” Vasos said. “While the number of closings represents less than one percent of our overall store base, we believe this decision better positions us to serve our customers and communities.”
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Fiscal Year 2025 Financial Guidance and Store Growth Outlook:
For fiscal 2025, Dollar General expects the following:
- Net sales growth in the range of approximately 3.4% to 4.4%
- Same-store sales growth in the range of approximately 1.2% to 2.2%
- Diluted EPS in the range of approximately $5.10 to $5.80
- Diluted EPS guidance assumes an effective tax rate of approximately 23.5%
- Capital expenditures, including those related to investments in the Company’s strategic initiatives, in the range of $1.3 billion to $1.4 billion
- The company also is reiterating its plans to execute approximately 4,885 real estate projects in fiscal 2025, including opening approximately 575 new stores in the United States and up to 15 new stores in Mexico, fully remodeling approximately 2,000 stores, remodeling approximately 2,250 stores through Project Elevate, and relocating approximately 45 stores.