As it continues to roll out its latest store concepts while dealing with macroeconomic issues, Dollar General Corp. topped a MarketBeat-published analyst consensus estimate on earnings but missed on revenue.
Dollar General matched a MarketBeat-published analyst consensus earnings per share estimate of $2.57 but fell a bit short of an $8.71 revenue target.
Comparable sales decreased 1.4% in the quarter year over year, driven by a decline in customer traffic partially offset by an increase in average transaction amount, Dollar General reported. Comps declined across the board in the apparel, consumables, seasonal and home products categories.
Comps increased 11.3% on a two-year stack basis, however, the company pointed out.
Net sales increased 2.8% to $8.65 billion versus the year-previous quarter. Positive sales contributions from new stores drove the net sales gain, partially offset by the decline in comp sales and the impact of store closures. Operating profit for the fourth quarter decreased 8.7% to $796.7 million from the year-earlier period.
Dollar General reported net income of $2.4 billion, or $10.17 per diluted share, for the full fiscal year, versus $2.66 billion, $10.62 per diluted share, in the annum before.
Net sales increased 1.4% to $34.22 billion versus the year previous. Positive sales contributions from new stores, partially offset by a decline in comps, and the impact of store closures drove the net sales increase.
Operating profit for fiscal year 2021 decreased 9.4% to $3.22 billion from the year earlier.
Among the points, Todd Vasos, Dollar General CEO, made during a company conference call was that COVID-19, inflation and supply chain issues affected fourth-quarter results, but that a number of positives came out of the period including comp gains from 2019. An element in support of those gains, the average basket size at year-end was about $16 and consisted of almost six items versus about $13 and five items at the end of 2019, which the company determined reflects the growing impact of its strategic initiatives and a degree of inflation.
Also, Vasos noted, when gas prices reach over $4 a gallon, which they have recently, Dollar General sees consumers stay closer to home, which suits the value and convenient proposition the company offers, particularly for the core customer.
Vasos remarked that Dollar General’s new upmarket store concept, Popshelf, expanded with 25 new locations opening in the fourth quarter, bringing the total number to 55 and exceeding the initial company goal of 50.
At the same time, Dollar General opened 11 new mainline stores with smaller-footprint pOpshelf operations within, bringing the total to 25. Vasos said results from the Popshelf operations, whether freestanding or as store departments, continue to be positive and that it would nearly triple the Popshelf store count this year, opening up to an additional 25 operations inside mainline locations. Dollar General plans going forward would bring the pOpshelf total to more than 150 stand-alone locations and a total of about 50 store-within-a-store operations. The company continues to expect year one annualized sales volumes for current locations to come in between $1.7 million and $2 million per store and anticipated the average gross margin rate for the stores to exceed 40%.
Vasos said in announcing the financial results, “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 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.”
