Dollar General reaffirms store opening plans despite Q4 sales decrease
Dollar General shared its financial results for its 2021 fiscal year fourth quarter and overall fiscal year, which ended on Jan 28.
“We are pleased with our fourth quarter and fiscal year results, and I want to thank our associates for their unwavering commitment to meeting the critical needs of our customers during the pandemic,” Todd Vasos, Dollar General’s chief executive officer said. “Despite a more challenging than expected operating environment, our teams remained focused on executing our operating priorities and advancing our strategic initiatives, which we believe position us well for solid sales and profit growth in 2022 and beyond.”
The retailer shared that its fourth-quarter net sales increased 2.8% and fiscal year net sales increased by 1.4%. Fourth-quarter same-store sales decreased 1.4% and increased 11.3% on a two-year stack basis. Fiscal year same-store sales decreased 2.8% and increased 13.5% on a two-year stack basis. The fourth-quarter operating profit decreased 8.7% to $797.7 million, and fiscal year operating profit decreased 9.4% to $3.2 billion, the company said.
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“For the full year, we are pleased with our net sales increase of 1.4%, which was on the high end of our guidance, and on top of a robust 21.6% increase in fiscal 2020. In addition, during the year, we completed the initial rollout of DG Fresh, executed more than 2,900 real estate projects, including the opening of our 18,000th store and 50 standalone pOpshelf locations, and launched new initiatives focused on health and international expansion,” Vasos said. “Overall, we are excited about our plans for 2022, as we look to further differentiate Dollar General from the rest of the retail landscape, while delivering long-term sustainable growth and value for our shareholders.”
Net sales increased 2.8% to $8.7 billion in the fourth quarter of 2021 compared to $8.4 billion in the fourth quarter of 2020. The net sales increase was primarily driven by positive sales contributions from new stores, partially offset by the decline in same-store sales and the impact of store closures. Same-store sales decreased 1.4% compared to the fourth quarter of 2020, driven by a decline in customer traffic, partially offset by an increase in the average transaction amount. Same-store sales in the fourth quarter of 2021 declined in each of the apparel, consumables, seasonal, and home products categories.
Operating profit for the fourth quarter of 2021 decreased 8.7% to $796.7 million compared to $872.2 million in the fourth quarter of 2020. The fourth quarter of 2020 included approximately $96 million of incremental investments the company made in response to the COVID-19 pandemic, primarily driven by $69 million in frontline employee appreciation bonuses, as well as measures taken to further protect the health and safety of employees and customers, the retailer noted.
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Dollar General also reported net income of $2.4 billion for the fiscal year 2021, a decrease of 9.6% compared to $2.7 billion in the fiscal year 2020. Diluted EPS decreased 4.2% to $10.17 for the fiscal year 2021 compared to diluted EPS of $10.62 in the fiscal year 2020.
“We feel very good about the underlying strength of the business, as reflected in our full-year outlook for fiscal 2022,” John Garratt, Dollar General’s chief financial officer said. “While we anticipate a challenging first quarter due to elevated cost pressures, ongoing supply chain disruptions, and the prior year sales and gross margin comparison, both of which were positively impacted by stimulus payments, we are confident in our full year plan, including our outlook for sales and EPS growth.”
Total additions to property and equipment in the fiscal year 2021 were $1.1 billion, including approximately: $510 million for improvements, upgrades, remodels and relocations of existing stores; $268 million for distribution and transportation-related projects; $244 million related to store facilities, primarily for leasehold improvements, fixtures and equipment in new stores; and $44 million for information systems upgrades and technology-related projects. During the fiscal year 2021, the Company opened 1,050 new stores, remodeled 1,752 stores, and relocated 100 stores.
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Lastly, the retailer also shared plans to execute 2,980 real estate projects in the fiscal year 2022, including 1,110 new store openings, 1,750 remodels, and 120 store relocations.