In a December 7th release, Dollar General, Inc. (DG) announced third quarter FY 2023 results for the period ending November 3rd. The company beat on both the top line and earnings against estimates, reversing a four-quarter downward trend estimates.
Dollar General Inc. posted net income of $276.3 million on total revenue of $9,964 million with a diluted EPS of $1.26. Comparable values for the third quarter of FY 2022 ending October 28th were net income of $522.1 million on revenue of $9,465 million with a diluted EPS $2.33.
Revenue was up 2.4 percent in Q3 2023 compared to the corresponding Q3 in 2022. During the most recent quarter, Dollar General attained a gross margin of 29.0 percent (30.5 percent in Q3 FY 2022) and an operating margin of 4.5 percent, down from 7.8 percent in Q3 2022.
The classification of revenue by category comprised:-
| Consumables including food |
81.9 % |
| Seasonal items |
9.7 % |
| Home requirements |
8.5% |
| Apparel |
2.9 % |
Capital expenditure during FY 2024 will range from $1,600 to $1,700 million for 800 new stores, 1,500 re-models and 90 re-locations.
Responding to complaints from civic organizations Dollar General added frozen and other foods in areas deemed “food deserts”
For the third quarter of FY 2023, consolidated comparable store sales, decreased by 1.3 percent due to lower average transaction values partly offset by increased traffic.
In commenting on results, Todd Vasos, the recently re-instated CEO stated “I am excited to be back at Dollar General and working with the team to fulfill our mission of Serving Others every day,” He added, “Over the last several weeks, we have spent significant time reviewing all areas of the business, and we have identified key opportunities for improvement both in the near term and over the longer term. Moving forward, our entire team is laser focused and moving with urgency to take the actions we have identified to drive operational excellence for our customers and employees.”
With specific reference to the most recent quarter, Vasos opined “While we are not satisfied with our financial results for the third quarter, including a significant headwind from inventory shrink, we are pleased with the momentum in some of the underlying sales trends, including positive customer traffic, as well as market share gains in both dollars and units. We continue to believe our model is relevant in all economic cycles, and we are working diligently to further enhance our unique combination of value and convenience.”
He concluded “With that in mind, we are pleased to announce today our real estate growth plans for fiscal year 2024, which include approximately 2,385 projects in total, including 800 new stores, 1,500 remodels, and 85 relocations. This is a modest slow down compared to the number of projects in recent years, which we believe is prudent in this environment. We are excited about the opportunities these projects provide to serve both new and existing customers, while also driving strong financial returns for the business and laying the foundation for future growth. Looking ahead, we are confident in this business model and its ability to create 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 November 3rd 2023, Dollar General posted total assets of $30,624 million including $5,528 as goodwill and intangibles and the company carried long-term debt and lease obligations of $16,723 million. DG had a market capitalization of $29,390 million on December 7th. The share has traded over the past 52 weeks from $101.09 to $133.96 with a 50-day moving average of $117.41. DG closed at $133.96 on Wednesday 6th December, pre-release, opening Thursday 7th December post-release at $136.27 Dollar General trades with a forward P/E of 17.7. For the trailing-12 months the company posted an operating margin of 7.0 percent and a profit margin of 5.6 percent and the company returned 6.6 percent on assets and 34.7 percent on equity.