Dollar General Reports Third Quarter 2021 Results

Updates Financial Guidance for Fiscal Year 2021

Provides the Fiscal Year 2022 Real Estate Growth Plans, Including Initial Expansion Outside the U.S.

Announces Target of Approximately 1,000 pOpshelf Stores by the end of Fiscal 2025

GOODLETTSVILLE, TN (STL.News) Dollar General Corporation (NYSE: DG) today reported financial results for its fiscal year 2021 third quarter (13 weeks) ended October 29, 2021.

  • Net Sales Increased 3.9% to $8.5 Billion
  • Same-Store Sales Decreased 0.6%; Increased 11.6% on a two-year stack basis1
  • Operating Profit of $665.6 Million, or 7.8% as a percentage of net sales
  • Diluted Earnings Per Share (“EPS”) of $2.08, representing a two-year compound annual growth rate of 21.0%
  • Year to Date Cash Flows From Operations of $2.2 Billion
  • Board of Directors Increases Share Repurchase Program Authorization; Declares Quarterly Cash Dividend of $0.42 per share

1 Same-store sales on a two-year stack basis represent the sum of the Q3 2021 same-store sales decrease and the Q3 2020 same-store sales increase.

“We are pleased with our third-quarter results, and I want to thank our associates for their unwavering commitment to meeting the needs of our customers, communities, and each other,” said Todd Vasos, Dollar General’s chief executive officer.  “During the quarter, we made meaningful progress advancing our key initiatives while continuing to successfully deliver for our customers, despite a challenging operating environment.

“We are excited today to announce our real estate growth plans for fiscal year 20222, which consist of nearly 3,000 real estate projects in total, including 1,110 new stores.  These plans include accelerating our pOpshelf store concept, as we expect to nearly triple our store count next year.  Importantly, given the sustained and positive performance of our pOpshelf concept, we plan to further accelerate the pace of new store openings as we move ahead, targeting a total of approximately 1,000 pOpshelf locations by fiscal year end 20253.

“We are also excited to announce our plans to expand our footprint internationally for the first time, with plans to open up to ten stores in Mexico by the end of fiscal 2022, as we continue to lay the foundation for future growth.

“Overall, we remain focused on our mission of Serving Others and are confident in our plans to drive long-term sustainable growth and value for our shareholders.”

2; the Fiscal year 2022 is the 53-week fiscal year ending February 3, 2023.
3; the Fiscal year 2025 is the 52-week fiscal year ending January 30, 2026.

Dollar General Third Quarter 2021 Highlights

Net sales increased 3.9% to $8.5 billion in the third quarter of 2021 compared to $8.2 billion in the third quarter of 2020.  The net sales increase was primarily driven by positive sales contributions from new stores, partially offset by a slight decline in same-store sales and the impact of store closures.  Same-store sales decreased 0.6% compared to the third quarter of 2020, driven by a decline in customer traffic, partially offset by an increase in the average transaction amount.  In addition, same-store sales in the third quarter of 2021 included a decline in the apparel and seasonal categories, partially offset by growth in the consumables and home products categories.

Gross profit as a percentage of net sales was 30.8% in the third quarter of 2021 compared to 31.3% in the third quarter of 2020, a decrease of 57 basis points.  This gross profit rate decrease was primarily attributable to an increased LIFO provision, increased transportation costs, 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 22.9% in the third quarter of 2021 compared to 21.9% in the third quarter of 2020, an increase of 105 basis points.  The primary expenses that represented a greater percentage of net sales in the current year period were retail labor, store occupancy costs, depreciation and amortization, repairs and maintenance, employee benefits, and supplies, partially offset by a reduction in miscellaneous Covid-related expenses.

Operating profit for the third quarter of 2021 decreased 13.9% to $665.6 million compared to $773.1 million in the third quarter of 2020.  The third quarter of 2020 included approximately $38 million of incremental investments the Company made in response to the COVID-19 pandemic, primarily driven by $25 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 third quarter of 2021 was 22.2% compared to 21.6% in the third quarter of 2020.  This higher effective income tax rate was primarily due to a reduced benefit associated with share-based compensation, an increase in uncertain tax positions, and changes in the state effective tax rate, partially offset by a greater benefit associated with federal tax credits.

The Company reported a net income of $487.0 million for the third quarter of 2021, a decrease of 15.2% compared to $574.3 million in the third quarter of 2020.  Diluted EPS decreased 10.0% to $2.08 for the third quarter of 2021 compared to diluted EPS of $2.31 in the third quarter of 2020.

NOTE: This is NOT the complete report.  Do NOT make financial decisions based on this summary.  It is critical to visit the Dollar General website to get the complete details.