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Dollar General Posts Q2 FY 2023 Results

08/31/2023

In an August 24th release, Dollar General, Inc. (DG) announced second quarter FY 2023 results for the period ending August 4th. The company disappointed on the top line for the fourth successive quarter, down by 0.7 percent from estimates. The Dollar General EPS was below consensus for the second consecutive quarter.

 

Dollar General Inc. posted net income of $464.8 million on total revenue of $9,796 million with a diluted EPS of $2.13.  Comparable values for the second quarter of FY 2022 ending July 29th were net income of $678.0 million on revenue of $9,426 million with a diluted EPS $2.98. Revenue was up 3.9 percent in Q2 2023 compared to the corresponding Q2 in 2022. During the most recent quarter, Dollar General attained a gross margin of 31.1 percent (32.0  percent in Q2 FY 2022) and an operating margin of 7.1 percent, down from 9.7 percent in Q2 2022.

 

The classification of revenue by category comprised:-

  • Consumables  including food,  80.8 %
  • Seasonal items,                         11.0%
  • Home requirements,                   5.3%
  • Apparel,                                      2.9%

 

Capital expenditure during FY 2023 will attain 1.6 Billion.  For 990 new stores, 2,000 re-models and 120 re-locations.Responding to complaints from civic organizations Dollar General added frozen and other foods in areas deemed “food deserts”

 

 

For the second quarter, consolidated comparable store sales, decreased by 0.1 percent.

 

In commenting on results, Jeff Owen, CEO stated “While we are not satisfied with our overall financial results, we made significant progress in the second quarter improving execution in our supply chain and our stores, as well as reducing our inventory growth rate and further strengthening our price position”. He added, “These actions were an important driver of improving customer traffic trends and growing total market share in the second quarter. In addition, we executed nearly 850 real estate projects during the quarter, further extending our reach and expanding our ability to serve both new and existing customers.”

 

Owens concluded  “We are pleased with the advancements we have made, and we are now taking further actions and making additional investments to accelerate our progress and ultimately serve our customers even better. While these investments will pressure our 2023 results, we believe they will further strengthen our foundation as we move into 2024 and focus on driving sustainable growth and creating long-term shareholder value.”

Guidance for FY 2023 included net sales growth of 1.3 to 3.3 percent; neutral same-store sales growth and an EPS ranging from $7.10 to $7.30.

 

Effective August 4th 2023, Dollar General posted total assets of $30,396 million including $5,601 as goodwill and intangibles and the company carried long-term debt and lease obligations of $16,704 million.  DG had a market capitalization of $34,580 million on August 31st. The share has traded over the past 52 weeks from $128.48 to $138.60 with a 50-day moving average of $165.48. DG closed at $156.93 on Wednesday 30th August, pre-release, opening Thursday 31st down 16.3 percent post-release at $131.29. Dollar General trades with a forward P/E of 15.7.  For the trailing-12 months the company posted an operating margin of 8.7 percent and a profit margin of 6.2 percent.  The company returned 7.3 percent on assets and 40.0 percent on equity over the past twelve months.

 

In the investors’ call the company commented on theft and announced preventive measures that may offend customers.