Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Dividend, Conference Call, Webcast

Dollar General Corporation Reports First Quarter 2022 Results


Dollar General Corporation (NYSE: DG) today reported financial results for its fiscal year 2022 first quarter (13 weeks) ended April 29, 2022.

"We are pleased with our start to 2022, and I want to thank each of our team members for their ongoing commitment and dedication to serving our customers every day," said Todd Vasos, Dollar General's chief executive officer. "Despite ongoing headwinds due to supply chain pressures and heightened inflation, we remained focused on controlling what we can control and delivered solid financial results, which exceeded our expectations for sales and EPS for the quarter."

"During the first quarter, we executed more than 800 real estate projects, and made significant progress advancing our key strategic initiatives to enhance the value and convenience proposition for our customers. We continue to drive strategic innovation as we further differentiate Dollar General in the discount retail channel, while delivering long-term sustainable growth and value for our shareholders."

First Quarter 2022 Highlights

Net sales increased 4.2% to $8.8 billion in the first quarter of 2022 compared to $8.4 billion in the first quarter of 2021. The net sales increase was primarily driven by positive sales contributions from new stores, partially offset by the slight decline in same-store sales and the impact of store closures. Same-store sales decreased 0.1% compared to the first quarter of 2021, driven by a decline in customer traffic, partially offset by an increase in average transaction amount. Same-store sales in the first quarter of 2022 declined in each of the seasonal, apparel, and home products categories, offset by an increase in the consumables category.

Gross profit as a percentage of net sales was 31.3% in the first quarter of 2022 compared to 32.8% in the first quarter of 2021, a decrease of 151 basis points. This gross profit rate decrease was primarily attributable to a greater proportion of sales coming from the consumables category, which generally has a lower gross profit rate than other product categories; an increased LIFO provision, which was driven by higher product costs; increased transportation costs; an increase in markdowns as a percentage of sales; increased distribution costs; and an increase in inventory damages. These factors were partially offset by higher inventory markups.

Selling, general and administrative expenses ("SG&A") as a percentage of net sales were 22.8% in the first quarter of 2022 compared to 22.0% in the first quarter of 2021, an increase of 78 basis points. The primary expenses that were a greater percentage of net sales in the current year period were retail labor, store occupancy costs, depreciation and amortization and utilities; partially offset by reductions in incentive compensation and winter storm related disaster expenses.

Operating profit for the first quarter of 2022 decreased 17.9% to $746.2 million compared to $908.9 million in the first quarter of 2021.

The effective income tax rate in the first quarter of 2022 was 21.8% compared to 22.0% in the first quarter of 2021. This lower effective income tax rate was primarily due to a decrease in pre-tax earnings in the 2022 period compared to the 2021 period while rate impacting items, such as the benefits from stock-based compensation and federal tax credits, remained materially the same in amount in both the 2022 and 2021 periods.

The Company reported net income of $552.7 million for the first quarter of 2022, a decrease of 18.5% compared to $677.7 million in the first quarter of 2021. Diluted EPS decreased 14.5% to $2.41 for the first quarter of 2022 compared to diluted EPS of $2.82 in the first quarter of 2021.

Merchandise Inventories

As of April 29, 2022, total merchandise inventories, at cost, were $6.1 billion compared to $5.1 billion as of April 30, 2021, an increase of 13.3% on a per-store basis. This increase primarily reflects the impact of product cost inflation and a greater mix of higher-value products.

Capital Expenditures

Total additions to property and equipment in first quarter of 2022 were $282 million, including approximately: $112 million for improvements, upgrades, remodels and relocations of existing stores; $107 million related to store facilities, primarily for leasehold improvements, fixtures and equipment in new stores; $47 million for distribution and transportation-related projects; and $9 million for information systems upgrades and technology-related projects. During first quarter of 2022, the Company opened 239 new stores, remodeled 532 stores, and relocated 32 stores.

Share Repurchases

In the first quarter of 2022, the Company repurchased $747 million of its common stock, or 3.4 million shares, at an average price of $220.13 per share, under its share repurchase program. The total remaining authorization for future repurchases was $1.4 billion at the end of the first quarter of 2022. 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, 2022, the Company's Board of Directors declared a quarterly cash dividend of $0.55 per share on the Company's common stock, payable on or before July 19, 2022 to shareholders of record on July 5, 2022. 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 2022 Financial Guidance and Store Growth Outlook

Despite the ongoing uncertainties arising from product cost inflation and continued pressure in the supply chain, the Company is updating its sales guidance, and reiterating the remainder of its financial guidance, for the 53-week fiscal year ending February 3, 2023 ("fiscal year 2022") issued on March 17, 2022. The Company now expects the following:

The Company continues to expect the following:

The Company is also reiterating its plans to execute 2,980 real estate projects in fiscal year 2022, including 1,110 new store openings, 1,750 remodels, and 120 store relocations.

"We are pleased with our strong start to the year," said John Garratt, Dollar General's chief financial officer. "As a result of our strong topline performance and current expectations for the remainder of the year, we are raising our net sales and same-store sales guidance for fiscal 2022. Looking ahead, our plans include targeted investments to further enhance the in-store experience, while driving an even greater improvement in in-stock levels and customer service. We believe these investments will position us well to build on our sales momentum as we move ahead."

Conference Call Information

The Company will hold a conference call on May 26, 2022 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 13729427. 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 23, 2022, and will be accessible via webcast replay or by calling (877) 660-6853. The conference ID for the telephonic replay is 13729427.

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 2022 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," "project," "expect," "estimate," "target," "forecast," "predict," "position," "assume," "opportunities," "intend," "continue," "future," "beyond," "ongoing," "potential," "long-term," "guidance," "goal," "outcome," "uncertainty," "look to," "move ahead," "looking ahead," "subject to," "committed," "confident," "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 18,356 stores in 47 states as of April 29, 2022. 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 29

 

April 30

 

January 28

 2022

 

 2021

 

 2022

ASSETS
Current assets:
Cash and cash equivalents

 $

       335,613

 

 $

       688,055

 

 $

       344,829

 

Merchandise inventories

 

       6,087,399

 

 

       5,099,465

 

 

       5,614,325

 

Income taxes receivable

 

             33,576

 

 

             16,637

 

 

             97,394

 

Prepaid expenses and other current assets  

 

          280,282

 

 

 

          237,588

 

 

 

          247,295

 

Total current assets  

 

       6,736,870

 

 

 

       6,041,745

 

 

 

       6,303,843

 

Net property and equipment  

 

       4,451,028

 

 

 

       3,999,170

 

 

 

       4,346,127

 

Operating lease assets  

 

     10,183,152

 

 

 

       9,614,974

 

 

 

     10,092,930

 

Goodwill  

 

       4,338,589

 

 

 

       4,338,589

 

 

 

       4,338,589

 

Other intangible assets, net  

 

       1,199,720

 

 

 

       1,199,840

 

 

 

       1,199,750

 

Other assets, net  

 

             46,949

 

 

 

             42,380

 

 

 

             46,132

 

Total assets  

 $

26,956,308

 

 

 $

25,236,698

 

 

 $

26,327,371

 

 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations

 $

       900,635

 

 $

                     -

 

 $

                     -

 

Current portion of operating lease liabilities

 $

    1,205,043

 

 $

    1,101,369

 

 $

    1,183,559

 

Accounts payable

 

       3,906,852

 

 

       3,294,423

 

 

       3,738,604

 

Accrued expenses and other

 

          930,260

 

 

          861,653

 

 

       1,049,139

 

Income taxes payable

 

               9,051

 

 

             57,953

 

 

               8,055

 

Total current liabilities  

 

       6,951,841

 

 

 

       5,315,398

 

 

 

       5,979,357

 

Long-term obligations  

 

       3,947,462

 

 

 

       4,130,710

 

 

 

       4,172,068

 

Long-term operating lease liabilities  

 

       8,959,174

 

 

 

       8,499,442

 

 

 

       8,890,709

 

Deferred income taxes  

 

          907,020

 

 

 

          769,430

 

 

 

          825,254

 

Other liabilities  

 

          229,187

 

 

 

          271,793

 

 

 

          197,997

 

Total liabilities  

 

     20,994,684

 

 

 

     18,986,773

 

 

 

     20,065,385

 

 
Commitments and contingencies
 
Shareholders' equity:
Preferred stock

 

                        -

 

 

                        -

 

 

                        -

 

Common stock

 

          198,623

 

 

          206,680

 

 

          201,265

 

Additional paid-in capital

 

       3,606,414

 

 

       3,457,160

 

 

       3,587,914

 

Retained earnings

 

       2,157,589

 

 

       2,588,006

 

 

       2,473,999

 

Accumulated other comprehensive loss

 

             (1,002

)

 

 

             (1,921

)

 

 

             (1,192

)

Total shareholders' equity  

 

       5,961,624

 

 

 

       6,249,925

 

 

 

       6,261,986

 

Total liabilities and shareholders' equity  

 $

26,956,308

 

 

 $

25,236,698

 

 

 $

26,327,371

 

DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
     

For the Quarter Ended

April 29

 

% of Net

 

April 30

 

% of Net

 2022 

 

Sales

 

 2021 

 

Sales

Net sales

 $

   8,751,352

 

100.00

 % 

 $

8,400,964

 

100.00

 % 

Cost of goods sold

 

      6,012,989

 

68.71

   

 

    5,645,296

 

67.20

 
Gross profit

 

      2,738,363

 

31.29

 

    2,755,668

 

32.80

Selling, general and administrative expenses

 

      1,992,206

 

22.76

   

 

    1,846,818

 

21.98

 
Operating profit

 

         746,157

 

8.53

 

        908,850

 

10.82

Interest expense

 

            39,676

 

0.45

   

 

          40,392

 

0.48

 
Income before income taxes

 

         706,481

 

8.07

 

        868,458

 

10.34

Income tax expense

 

         153,824

 

1.76

   

 

        190,709

 

2.27

 
Net income

 $

      552,657

 

6.32

 % 

 

 $

    677,749

 

8.07

 % 

           
Earnings per share:        
Basic

 $

             2.42

 

 $

           2.84

 
Diluted

 $

             2.41

 

 $

           2.82

 
Weighted average shares outstanding:    
Basic

 

         228,477

     

 

        238,548

     
Diluted

 

         229,609

     

 

        240,301

     
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
For the 13 Weeks Ended

April 29

 

April 30

 2022

 

 2021

Cash flows from operating activities:
Net income

 $

          552,657

 

 $

         677,749

 

Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization

 

             172,563

 

 

            154,146

 

Deferred income taxes

 

               81,679

 

 

               58,794

 

Noncash share-based compensation

 

               26,945

 

 

 

               23,533

 

Other noncash (gains) and losses

 

               68,585

 

 

               13,040

 

Change in operating assets and liabilities:
Merchandise inventories

 

           (538,921

)

 

            135,732

 

Prepaid expenses and other current assets

 

              (34,482

)

 

             (41,831

)

Accounts payable

 

             172,110

 

 

           (295,206

)

Accrued expenses and other liabilities

 

           (116,384

)

 

           (136,743

)

Income taxes

 

               64,814

 

 

            116,013

 

Other  

 

                      (50

)

 

 

               (2,236

)

Net cash provided by (used in) operating activities  

 

             449,516

 

 

 

            702,991

 

       
Cash flows from investing activities:
Purchases of property and equipment

 

           (281,580

)

 

           (277,730

)

Proceeds from sales of property and equipment

 

                     736

 

 

                    807

 

Net cash provided by (used in) investing activities  

 

           (280,844

)

 

 

           (276,923

)

 
Cash flows from financing activities:
Issuance of long-term obligations

 

                           -

 

 

                          -

 

Repayments of long-term obligations

 

                (3,034

)

 

               (1,753

)

Net increase (decrease) in commercial paper outstanding

 

             705,300

 

 

                          -

 

Borrowings under revolving credit facilities

 

                           -

 

 

                          -

 

Repayments of borrowings under revolving credit facilities

 

                           -

 

 

                          -

 

Costs associated with issuance of debt

 

                           -

 

 

                          -

 

Repurchases of common stock

 

           (746,773

)

 

       (1,000,352

)

Payments of cash dividends

 

           (125,262

)

 

             (99,832

)

Other equity and related transactions

 

                (8,119

)

 

             (12,653

)

Net cash provided by (used in) financing activities  

 

           (177,888

)

 

 

       (1,114,590

)

 
Net increase (decrease) in cash and cash equivalents

 

                (9,216

)

 

           (688,522

)

Cash and cash equivalents, beginning of period

 

             344,829

 

 

         1,376,577

 

Cash and cash equivalents, end of period  

 $

          335,613

 

 

 $

         688,055

 

 
Supplemental cash flow information:
Cash paid for:
Interest

 $

            52,349

 

 $

           55,858

 

Income taxes

 $

              7,226

 

 $

           15,801

 

Supplemental schedule of non-cash investing and financing activities:
Right of use assets obtained in exchange for new operating lease liabilities

 $

          396,628

 

 $

         417,749

 

Purchases of property and equipment awaiting processing for payment,
included in Accounts payable

 $

          141,202

 

 $

           93,599

 

DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Selected Additional Information
(Unaudited)
 
 
Sales by Category (in thousands)
 
For the Quarter Ended

April 29

 

April 30

 

 

2022

 

2021

 

% Change

Consumables

 $

                 6,960,501

 $

                 6,378,135

 

9.1

%

Seasonal

 

                       961,378

 

                    1,050,382

 

-8.5

%

Home products

 

                       539,822

 

                       571,315

 

-5.5

%

Apparel

 

                       289,651

 

 

                       401,132

 

-27.8

%

Net sales

 $

                 8,751,352

 

 $

                 8,400,964

 

4.2

%

 
 
 
 Store Activity
 

For the Quarter Ended

April 29

 

April 30

2022

 

2021

Beginning store count  

 

                          18,130

 

             17,177

 

New store openings

 

                               239

 

                   260

 

Store closings

 

                                (13

)

                    (11

)

Net new stores

 

                               226

 

 

                   249

 

Ending store count

 

                          18,356

 

 

             17,426

 

Total selling square footage (000's)  

 

                       136,466

 

 

           128,953

 

Growth rate (square footage)  

 

5.8

%

 

5.8

%

 


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