Dollar General Q4 profit falls despite higher sales; to open 1,110 stores
Dollar General on Thursday reported upbeat guidance for the next fiscal year even as it warned of a challenging first quarter.
The discount retailer also reaffirmed its plans to execute 2,980 real estate projects in 2022, which include 1,110 new stores (up from 1,050 last year) along with 1,750 remodels and 120 store relocations. The company is also planning to open its first international stores, with 10 locations in Mexico.
[Read More: Dollar General to open 1,110 stores in 2022; plans international expansion]
Dollar General said that it expects same-store sales to fall 1% to 2% in its first quarter, with earnings per share of $2.25 to $2.35, below the $2.75 analysts were looking for. The company said it anticipated a challenging first quarter “due to elevated cost pressures, ongoing supply chain disruptions, and the prior year sales and gross margin comparison.” However, it gave upbeat guidance for the full fiscal year, with sales and earnings that exceeded analysts’ estimates.
The retailer posted net income of $597.4 million, or $2.57 per share, for the quarter ended Jan.28, down from $642.7 million, or $2.62 per share, last year.
Sales rose 2.8% to $8.651 billion from $8.415 billion last year. The rise in sales came from contributions from new stores, which was partially offset by a decline in same-store sales amid lower customer traffic, Dollar General said.
Same-store sales fell 1.4% but increased 11.3% on a two-year stack basis. Same-store sales in the fourth quarter of 2021 declined in the apparel, consumables, seasonal, and home products categories.
For the full year, net sales increased 1.4% to $34.2 billion. The company’s net income declined 9.6% to $2.4 billion.
During the year, Dollar General completed the initial rollout of DG Fresh, executed more than 2,900 real estate projects, including the opening of its 18,000th store and 50 standalone Popshelf locations and launched new initiatives focused on health and international expansion.
“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,” said Todd Vasos, CEO. “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.”
For fiscal 2022, Dollar General expects sales growth of 10%, same-store sales growth of 2.5% and earnings per share growth of 12% to 14%. Analysts had estimated sales of $36.746 billion, implying 7.3% growth, a same-store sales increase of 2.5% and earnings per share of $11.09, implying 9.1% growth.
The company said it is raising its quarterly dividend by 31%, to 55 cents a share.
Dollar General operated 17,915 stores in 46 states as of October 29, 2021.