In an August 29^th release, Dollar General, Inc. (DG) announced Q2 FY 2024 results for the period ending August 2^nd. The Company fell below estimates on revenue and earnings and substantially cut the FY 2024 outlook wityh an evident impact on share price.

For Q2 Dollar General Inc. posted net income of $374 million on total revenue of $10,210 million ($10,360 million expected) with a diluted EPS of $1.70 ($1.79 expected).  Comparable values for Q2 FY 2023 ending August 4^h were net income of $469 million on revenue of $9,796 million with a diluted EPS $2.13.

Revenue was up 4.2 percent in Q2 2024 compared to Q2 2023. During the most recent quarter, Dollar General attained a gross margin of 30.0 percent (31.1  percent in Q2 2023) and an operating margin of 5.4 percent, down from 7.1 percent in Q2 2023.

For Q2 2023, consolidated comparable store sales, increased by 0.5 percent despite lower average transaction values and reduced traffic.

The classification of revenue by category in Q2 FY 20234 comared to Q2 2023 comprised:-

• Consumables  including food*,   82.2%  up 6.0%
• Seasonal items,                            10.3%  down 2.0%
• Home products,                             4.7%   down 7.0%
• Apparel,                                         2.8%   down 1.3%

* not separated by category

In commenting on results, Todd Vasos, CEO stated “We made important progress on our Back to Basics plan in the second quarter. However, despite advancing several of our operational goals and driving positive traffic growth, we are not satisfied with our financial results, including top line results that were below our expectations for the quarter.”

Vasos concluded “While we believe the softer sales trends are partially attributable to a core customer who feels financially constrained, we know the importance of controlling what we can control. With the evolving retail and consumer landscape in mind, we are taking decisive action to further enhance our value and convenience offering, as well as the in-store experience for our associates and customers.”

Guidance for FY 2024 was substantially downgraded and included a 28 percent reduction in net sales growth of 4.7 to 5.3 percent; same-store sales growth of 1.0 to 1.6 percent; and diluted EPS, reduced by 20.0 percent to a range of $5.50 to $6.20.

During Q2 FY 2024 Dollar General opened a net 359 new stores. As of August 2^nd the Company operated a total of 20,345 stores representing 154,475 square feet, a 5.5 percent growth for the quarter. Expenditure for property purchases and equipment during Q2 FY 2024 attained $696 million  including new stores, remodels and upgrades to DCs, transport and technology

Effective August 2^nd 2024, Dollar General posted total assets of $31,814 million including $5,539 as goodwill and intangibles. The Company carried long-term debt and lease obligations of $16,273 million.  Dollar General attained a market capitalization of $27,230 million on August 29^th 2024. The share has traded over the past 52 weeks from $168.07 down to $84.00 with a 50-day moving average of $123.97. DG closed at $124.50 on August 28^th, pre-release, closing at $84.00 on August 29^th down 32.5 percent at a six-year low. Dollar General trades with a forward P/E of 17.6.  For the trailing 12-months the company posted an operating margin of 5.5 percent and a profit margin of 3.9 percent, returning 4.6 percent on assets and 23.4 percent on equity.