Dollar General Corporation (NYSE: DG) is proud to serve as America’s neighborhood general store. Founded in 1939, Dollar General lives its mission of Serving Others every day by providing access to affordable products and services for its customers, career opportunities for its employees, and literacy and education support for its hometown communities. As of August 4, 2023, the company’s 19,488 Dollar General, DG Market, DGX and pOpshelf stores across the United States and Mi Súper Dollar General stores in Mexico provide everyday essentials including food, health and wellness products, cleaning and laundry supplies, self-care and beauty items, and seasonal décor from our high-quality private brands alongside many of the world’s most trusted brands such as Coca Cola, PepsiCo/Frito-Lay, General Mills, Hershey, J.M. Smucker, Kraft, Mars, Nestlé, Procter & Gamble and Unilever. Learn more at DollarGeneral.com.
Dollar General Reports First Quarter 2005 Earnings; Comments on Outlook
May 26, 2005
GOODLETTSVILLE, Tenn.--(BUSINESS WIRE)--May 26, 2005--Dollar General Corporation (NYSE: DG) today reported diluted earnings per share ("EPS") of $0.20 for the quarter ended April 29, 2005, compared with EPS of $0.20 for the prior year quarter ended April 30, 2004. Net income for the first quarter of 2005 was $64.9 million, 4.3 percent below net income of $67.8 million for the first quarter of fiscal 2004.
Net sales during the first quarter of 2005 increased 13.2 percent to $1.98 billion from $1.75 billion in the first quarter of 2004. The increase is primarily a result of net new stores and a same-store sales increase of 4.9 percent.
Gross profit during the current year period was $563.3 million, or 28.5 percent of sales, versus $512.3 million, or 29.3 percent of sales, during the comparable period in the prior year. The decrease in the gross profit rate is primarily attributable to lower sales, as a percent of total sales, in the Company's seasonal, home products and basic clothing categories, which have higher than average markups. Higher transportation costs also contributed to the decline in the gross profit rate. These factors were partially offset by the Company's higher average markups on beginning inventories.
Selling, general and administrative expenses ("SG&A") during the current year period were $456.4 million, or 23.1 percent of sales, versus $397.7 million, or 22.8 percent of sales, during the comparable period in the prior year. The increase in SG&A as a percent to sales is primarily the result of increases in store occupancy costs, including rent and utility expenses, repairs and maintenance, and fees associated with increased customer usage of debit cards. These increases were partially offset by decreases from the 2004 quarter in consulting fees relating to the Company's EZstore project and fees associated with Sarbanes-Oxley compliance efforts which did not recur in the 2005 quarter.
During the current year period, the Company repurchased approximately 1.2 million shares of its common stock for $25.1 million. These repurchases increase to 1.7 million the total number of shares repurchased under the Company's current ten million-share authorization, which expires November 30, 2005.
2005 Outlook
The Company expects EPS of $0.20-$0.23 for its second quarter ending July 29, 2005. For the fiscal year ending February 3, 2006, the Company believes that its previously reported EPS outlook of $1.15-$1.20 (after eliminating the effect of expensing stock options included in the Company's previous outlook), while still achievable, will be more difficult to attain considering the lower than anticipated earnings during its first quarter, as well as continuing concerns regarding the potential negative impact of the economy on discretionary spending of the Company's customers.
Conference Call
The Company will host a conference call on Thursday, May 26, 2005, at 10 a.m. EDT to discuss the quarter's results. The security code for the conference call is "Dollar General." If you wish to participate, please call (334) 260-2280 at least 10 minutes before the conference call is scheduled to begin. The call will also be broadcast live online at www.dollargeneral.com and can be accessed by clicking on the homepage "Spotlight Item." A replay of the conference call will be available until 5 p.m. EDT on Thursday, June 9, online or by calling (334) 323-7226. The replay pass code is 11237744.
Non-GAAP Disclosures
Return on invested capital ("ROIC"), included in the accompanying schedules to this release, may be considered a non-GAAP financial measure. Management believes that return on invested capital is useful because it provides investors with additional useful information for evaluating the efficiency of the Company's capital deployed in its operations. In addition, the Company has provided a calculation of ROIC and return on assets, computed using net income, excluding a restatement-related penalty, a non-GAAP measure, which management believes more clearly reflects the ongoing operations of the Company. This information should not be considered a substitute for any measures derived in accordance with GAAP. The Company has included its calculations of these non-GAAP measures and reconciliations to the most comparable GAAP financial measures in the accompanying schedules.
Forward-Looking Information
This press release contains forward-looking information, such as the information in the section entitled "2005 Outlook." The words "believe," "anticipate," "project," "plan," "schedule," "expect," "estimate," "objective," "forecast," "goal," "intend," "will likely result," or "will continue" and similar expressions generally identify forward-looking statements. These matters involve risks, uncertainties and other factors that may cause the actual performance of the Company to differ materially from that expressed or implied by these forward-looking statements. All forward-looking information should be evaluated in the context of these risks, uncertainties and other factors. The Company believes the assumptions underlying these forward-looking statements are reasonable; however, any of the assumptions could be inaccurate and, therefore, actual results may differ materially from those projected by, or implied in, the forward-looking statements. Factors that may result in actual results differing from such forward-looking information include, but are not limited to:
-- fuel price and interest rate fluctuations;
-- a deterioration in general economic conditions whether caused
by acts of war, terrorism or other factors;
-- changes in demand due to unexpected or unusual weather
patterns, economic conditions or other factors;
-- transportation and distribution delays or interruptions both
domestically and internationally;
-- labor shortages in the trucking industry;
-- the Company's ability to negotiate effectively the cost and
purchase of merchandise;
-- prolonged or repeated price increases of certain raw materials
that could affect vendors' product costs;
-- inventory risks due to shifts in market demand;
-- changes in product mix;
-- interruptions in suppliers' businesses;
-- the inability to execute operating initiatives;
-- costs and potential problems and interruptions associated with
implementation of new or upgraded systems and technology or
with maintenance or adequate support of existing systems;
-- a continued rise in health insurance costs or workers'
compensation costs;
-- seasonality of the Company's business such as a sales
shortfall during the Christmas selling season;
-- unanticipated changes in the federal or state minimum wage or
living wage requirements;
-- changes in federal or state regulations governing the sale of
the Company's products, particularly "over-the-counter"
medications or health products;
-- excessive costs and delays associated with building, opening
and operating new stores;
-- excessive costs and delays associated with building or opening
distribution centers;
-- results of legal proceedings and claims; and
-- other risk factors described in the Company's Form 10-K for
the fiscal year ended January 28, 2005, filed with the SEC on
April 12, 2005, and most recent Form 10-Q, as well as
elsewhere in this press release.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Except as may be required by law, the Company disclaims any obligation to publicly update or revise any forward-looking statements contained herein to reflect events or circumstances occurring after the date of this release or to reflect the occurrence of unanticipated events. Readers are advised, however, to consult any further disclosures the Company may make on related subjects in its public disclosures or documents filed with the SEC.
About Dollar General
Dollar General is a Fortune 500® discount retailer with 7,551 neighborhood stores as of April 29, 2005. Dollar General stores offer convenience and value to customers by offering consumable basic items that are frequently used and replenished, such as food, snacks, health and beauty aids and cleaning supplies, as well as a selection of basic apparel, housewares and seasonal items at everyday low prices. The Company store support center is located in Goodlettsville, Tennessee. Dollar General's Web site can be reached at www.dollargeneral.com.
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
April 29, April 30, January 28,
Subject to reclassification 2005 2004 2005
--------------------------------- ----------- ----------- -----------
(Unaudited) (Unaudited)
ASSETS (Restated)
(a)
Current assets:
Cash and cash equivalents $ 236,523 $ 206,699 $ 232,830
Short-term investments - 71,651 42,925
Merchandise inventories 1,465,981 1,277,185 1,376,537
Deferred income taxes 21,525 21,852 24,908
Prepaid expenses and other
current assets 59,166 52,271 53,702
--------------------------------- ----------- ----------- -----------
Total current assets 1,783,195 1,629,658 1,730,902
--------------------------------- ----------- ----------- -----------
Property and equipment, at cost 1,990,986 1,775,496 1,940,335
Less: accumulated depreciation
and amortization 898,989 789,441 859,497
--------------------------------- ----------- ----------- -----------
Net property and equipment 1,091,997 986,055 1,080,838
--------------------------------- ----------- ----------- -----------
Other assets, net 29,346 26,464 29,264
--------------------------------- ----------- ----------- -----------
Total assets $2,904,538 $2,642,177 $2,841,004
================================= =========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term
obligations $ 10,737 $ 16,880 $ 12,860
Accounts payable 459,742 510,187 409,327
Accrued expenses and other 322,742 293,568 333,889
Income taxes payable 54,557 38,322 69,616
--------------------------------- ----------- ----------- -----------
Total current liabilities 847,778 858,957 825,692
--------------------------------- ----------- ----------- -----------
Long-term obligations 256,452 261,621 258,462
Deferred income taxes 72,342 56,137 72,385
Shareholders' equity:
Preferred stock - - -
Common stock 164,071 164,354 164,086
Additional paid-in capital 441,119 386,158 421,600
Retained earnings 1,129,626 920,783 1,102,457
Accumulated other
comprehensive loss (928) (1,108) (973)
--------------------------------- ----------- ----------- -----------
1,733,888 1,470,187 1,687,170
Other shareholders' equity (5,922) (4,725) (2,705)
--------------------------------- ----------- ----------- -----------
Total shareholders' equity 1,727,966 1,465,462 1,684,465
--------------------------------- ----------- ----------- -----------
Total liabilities and
shareholders' equity $2,904,538 $2,642,177 $2,841,004
================================= =========== =========== ===========
(a) The balance sheet as of April 30, 2004 has been restated using
the accounting practices for leases described in the Company's
press release dated March 3, 2005.
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
For the Quarter (13 Weeks) Ended
-----------------------------------------------
April 29, % of Net April 30, % of Net
2005 Sales 2004 Sales
----------- ----------- ----------- -----------
Net sales $1,977,829 100.00% $1,747,959 100.00%
Cost of goods sold 1,414,480 71.52 1,235,709 70.69
--------------------- ----------- ----------- ----------- -----------
Gross profit 563,349 28.48 512,250 29.31
Selling, general and
administrative 456,428 23.08 397,700 22.75
--------------------- ----------- ----------- ----------- -----------
Operating profit 106,921 5.41 114,550 6.55
Interest income (2,616) (0.13) (2,002) (0.11)
Interest expense 5,968 0.30 8,444 0.48
--------------------- ----------- ----------- ----------- -----------
Income before taxes
on income 103,569 5.24 108,108 6.18
Provisions for taxes
on income 38,669 1.96 40,259 2.30
--------------------- ----------- ----------- ----------- -----------
Net income $ 64,900 3.28% $ 67,849 3.88%
===================== =========== =========== =========== ===========
Diluted earnings per
share $ 0.20 $ 0.20
===================== =========== ===========
Weighted average
diluted shares
(000s) 331,218 337,257
===================== =========== ===========
Basic earnings per
share $ 0.20 $ 0.20
===================== =========== ===========
Weighted average
basic shares (000s) 328,208 334,109
===================== =========== ===========
Dividends per share $ 0.040 $ 0.040
===================== =========== ===========
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
For the Quarter
(13 Weeks) Ended
-----------------------
April 29, April 30,
2005 2004
----------- -----------
Cash flows from operating activities:
Net income $ 64,900 $ 67,849
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 44,006 39,636
Deferred income taxes 3,340 12,559
Tax benefit from stock option exercises 2,967 2,172
Change in operating assets and
liabilities:
Merchandise inventories (89,444) (120,044)
Other current assets (5,464) (2,235)
Accounts payable 60,526 100,549
Accrued expenses and other (10,824) (9,175)
Income taxes (15,086) (7,422)
Other (170) (15,512)
--------------------------------------------- ----------- -----------
Net cash provided by operating activities 54,751 68,377
--------------------------------------------- ----------- -----------
Cash flows from investing activities:
Purchases of property and equipment (65,061) (60,703)
Purchases of short term investments (21,250) (129,150)
Sales of short term investments 64,175 126,225
Proceeds from sale of property and
equipment 122 29
--------------------------------------------- ----------- -----------
Net cash used in investing activities (22,014) (63,599)
--------------------------------------------- ----------- -----------
Cash flows from financing activities:
Repayments of long-term obligations (4,722) (4,063)
Payment of cash dividends (13,145) (13,319)
Proceeds from exercise of stock options 13,494 6,546
Repurchases of common stock (25,062) (133,589)
Other financing activities 391 447
--------------------------------------------- ----------- -----------
Net cash used in financing activities (29,044) (143,978)
--------------------------------------------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents 3,693 (139,200)
Cash and cash equivalents, beginning of
period 232,830 345,899
--------------------------------------------- ----------- -----------
Cash and cash equivalents, end of period $ 236,523 $ 206,699
============================================= =========== ===========
Supplemental schedule of noncash investing
and financing activities:
Repurchases of common stock included in
accounts payable $ - $ 18,996
Purchases of property and equipment awaiting
processing for payment, included in accounts
payable $ 2,810 $ 16,494
Purchases of property and equipment under
capital lease obligations $ 578 $ 550
============================================= =========== ============
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Selected Additional Information
(Unaudited)
Sales by Category (in thousands)
-----------------------------------
13 Weeks Ended
-----------------------------------
April 29, April 30, %
2005 2004 Change
----------- ----------- -----------
Highly consumable $1,321,306 $1,114,394 18.6 %
Seasonal 275,295 260,438 5.7 %
Home products 211,752 214,773 (1.4)%
Basic clothing 169,476 158,354 7.0 %
----------- ----------- -----------
Total sales $1,977,829 $1,747,959 13.2%
=========== =========== ===========
New Store Activity
-----------------------
13 Weeks Ended
-----------------------
April 29, April 30,
2005 2004
----------- -----------
Beginning store count 7,320 6,700
New store openings 255 244
Store closings 24 14
Net new stores 231 230
Ending store count 7,551 6,930
Total selling square footage (000's) 51,739 47,004
Customer Transaction
Data
-----------------------
13 Weeks Ended
-----------------------
April 29, April 30,
2005 2004
----------- -----------
Same-store customer transactions +1.3% +3.6%
Average customer purchase
(total stores) $ 8.79 $ 8.41
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Non-GAAP Disclosures
Return on Invested Capital (b)
(Unaudited)
(Restated) (a)
For the Four Quarters
Ended
-----------------------
April 29, April 30,
($ in thousands) 2005 2004
----------- -----------
Net income $ 341,241 $ 306,519
Add:
Interest expense, net 19,129 28,534
Rent expense 264,423 226,645
Tax effect of interest and rent (101,063) (95,907)
----------- -----------
Interest and rent, net of tax 182,489 159,272
----------- -----------
Return, net of tax $ 523,730 $ 465,791
----------- -----------
Restatement-related item - penalty expense - 10,000
----------- -----------
Return excluding restatement-related item $ 523,730 $ 475,791
----------- -----------
Average Invested Capital:
Average long-term obligations (c) $ 285,575 $ 295,625
Shareholders' equity (d) 1,589,803 1,439,889
Average rent x 8 (e) 1,964,272 1,684,904
----------- -----------
Invested capital $3,839,650 $3,420,418
----------- -----------
Return on invested capital 13.6% 13.6%
=========== ===========
Return on invested capital, excluding
restatement- related item 13.6% 13.9%
=========== ===========
(a) Net income used in the above calculations has been restated
using the accounting practices for leases described in the
Company's press release dated March 3, 2005.
(b) The Company believes that the most directly comparable ratio
calculated solely using GAAP measures is the ratio of net
income to the sum of average long-term obligations, including
current portion, and average shareholders' equity. This ratio
was 18.2% and 17.7% for the rolling four quarters ended April
29, 2005 and April 30, 2004, respectively.
(c) Average long-term obligations is equal to the average long-term
obligations, including current portion, measured at the end of
each of the last five fiscal quarters.
(d) Average shareholders' equity is equal to the average
shareholders' equity measured at the end of each of the last
five fiscal quarters.
(e) Average rent expense is computed using a rolling two-year
period. Average rent expense is multiplied by a factor of
eight to capitalize operating leases in the determination of
pretax invested capital. This is a conventional methodology
utilized by credit rating agencies and investment bankers.
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Non-GAAP Disclosures
Return on Assets
(Unaudited)
(Restated) (a)
For the Four Quarters
Ended
-----------------------
April 29, April 30,
($ in thousands) 2005 2004
----------- -----------
Net income $ 341,241 $ 306,519
Restatement-related item, net of tax - 10,000
----------- -----------
Net income, excluding restatement-related
item $ 341,241 $ 316,519
----------- -----------
Average assets (b) $2,761,511 $2,497,047
----------- -----------
Return on assets 12.4% 12.3%
=========== ===========
Return on assets, excluding restatement-
related item 12.4% 12.7%
=========== ===========
(a) Net income used in the above calculations has been restated
using the accounting practices for leases described in the
Company's press release dated March 3, 2005.
(b) Average assets is equal to the average total assets measured at
the end of each of the last five fiscal quarters.
CONTACT: Dollar General Corporation
Investor Contact:
Emma Jo Kauffman, 615-855-5525
or
Media Contact:
Tawn Earnest, 615-855-5209
SOURCE: Dollar General Corporation