Dollar General Corp., the Goodlettsville, Tennessee-based retailer, reported financial results for its fiscal year 2019 third quarter (13 weeks) ended Nov 1. Net Sales increased 8.9 percent; same-store sales increased 4.6 percent and operating profit increased 11.1 percent to $491.4 million. The board of directors declared a fourth quarter 2019 cash dividend of $0.32 per share.
“We are pleased with another quarter of strong performance across the business,” said Todd Vasos, Dollar General’s CEO. “The quarter was highlighted by our best customer traffic and same-store sales increases in nearly five years, as well as double-digit growth in both operating profit and diluted EPS. We continue to execute well on many fronts, while maintaining our focus on delivering value and convenience for our customers. As a result of our performance through the first three quarters of 2019 and outlook for the fourth quarter, we are raising our full-year financial guidance as we work to finish a strong year.”
“As we celebrate 80 years of Serving Others at Dollar General, I am excited about the future and the plans we have in place to continue serving our customers and driving growth for our shareholders.”
Third quarter 2019 highlights
Net sales increased 8.9 percent to $7.0 billion in the third quarter of 2019 compared to $6.4 billion in the third quarter of 2018. This net sales increase included positive sales contributions from new stores and growth in same-store sales, modestly offset by the impact of store closures. Same-store sales increased 4.6 percent compared to the third quarter of 2018, driven by increases in both average transaction amount and customer traffic. Same-store sales in the third quarter of 2019 included growth in the consumables, seasonal, home and apparel categories.
Gross profit as a percentage of net sales was 29.5 percent in the third quarter of 2019 compared to 29.5 percent in the third quarter of 2018, an increase of one basis point.
The company reported net income of $365.6 million for the third quarter of 2019 compared to $334.1 million in the third quarter of 2018.
39-week period highlights
For the 39-week period ended Nov. 1, net sales increased 8.5 percent to $20.6 billion, compared to $19.0 billion in the comparable 2018 period. This net sales increase included positive sales contributions from new stores and growth in same-store sales, modestly offset by the impact of store closures. Same-store sales increased 4.1 percent compared to the 2018 39-week period, driven by increases in both average transaction amount and customer traffic. Same-store sales in the 2019 period included growth in the consumables, seasonal, and home categories, partially offset by a decline in the apparel category.
Gross profit as a percentage of net sales was 30.2 percent in the 2019 39-week period, compared to 30.2 percent in the comparable 2018 period, a decrease of three basis points.
The company reported net income of $1.2 billion for the 2019 39-week period compared to $1.1 billion in the comparable 2018 period.
Fiscal year 2019 financial guidance and store growth outlook
For the 52-week fiscal year ending Jan. 31, 2020, or fiscal 2019, the company is updating its financial guidance issued on Aug. 29. The financial guidance includes the anticipated impact of previously implemented tariff rates on certain products imported from China, and the additional tariffs expected to become effective on Dec. 15, 2019. The guidance also assumes that the company can successfully mitigate, absorb, or otherwise offset the impact of these tariffs. The guidance does not contemplate any additional increases in tariff rates, any expansion of additional products subject to tariffs or any tariff-related impacts to broader consumer spending.
For fiscal year 2019, the company now expects the following:
- Net sales growth in the low 8 percent range, compared to its previous expectation of approximately 8 percent
- Same-store sales growth in the mid-to-high 3 percent range, compared to its previous expectation in the low-to-mid 3 percent range
- Operating profit growth of approximately 6 percent to 8 percent, compared to its previous range of approximately 5 percent to 7 percent
In addition, the company continues to expect capital expenditures in the range of $775 million to $825 million, including those related to investments in the company’s strategic initiatives.
The Dollar General Corp. also is reiterating its plans to execute approximately 2,075 real estate projects in fiscal year 2019, including 975 new store openings, 1,000 mature store remodels and 100 store relocations.
Fiscal year 2020 store growth outlook
For the 52-week fiscal year ending Jan. 29, 2021, or fiscal year 2020, Dollar General is planning nearly 2,600 real estate projects, including 1,000 new store openings, 1,500 mature store remodels and 80 store relocations.
“We are excited to accelerate our real estate growth plans in 2020,” said Vasos. “We continue to see a significant number of opportunities to serve more customers and communities with our innovative mix of store formats. The sustained positive results we are seeing from our portfolio of real estate projects further validates our belief that our ongoing investment in high-return real estate projects, along with our strategic initiatives, is the best use of our capital as we look to continue delivering long-term shareholder value.”