About Dollar General Corporation 

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 Increased Earnings for 2002; Outlook for 2003

March 17, 2003

GOODLETTSVILLE, Tenn., Mar 17, 2003 /PRNewswire-FirstCall via COMTEX/ -- Dollar General Corporation (NYSE: DG) today reported fiscal 2002 net income of $264.9 million, or $0.79 per diluted share, an increase of 28 percent compared to net income of $207.5 million, or $0.62 per diluted share in 2001. During the year, the Company recorded net restatement-related pre-tax income of approximately $23.1 million compared to net restatement-related pre-tax expenses of approximately $28.4 million in 2001. Excluding the restatement-related items in both years, net income for fiscal 2002 would have been $250.9 million, or $0.75 per share, an increase of 11 percent compared to 2001 net income of $225.5 million, or $0.67 per share.

"Fiscal 2002 was a year of hard work and meaningful progress at Dollar General," said Don Shaffer, acting CEO, president and chief operating officer. "We ended the year with impressive cash flow, 622 new stores, a strong balance sheet and a significant list of operational achievements."

2002 Fiscal Year

Net sales totaled $6.10 billion for fiscal year 2002, an increase of 14.6 percent over fiscal 2001 sales of $5.32 billion. The increase resulted primarily from 573 net new stores and a same-store sales increase of 5.7 percent.

Gross profit for 2002 was $1.72 billion, or 28.3 percent of net sales, compared with $1.51 billion, or 28.4 percent of net sales in 2001. Inventory shrinkage calculated at the retail value of the inventory, as a percentage of net sales, increased to 3.52 percent in 2002 compared to 2.90 percent in 2001. The increase in shrink was partially offset by improved purchase markups, leverage on distribution and transportation costs, and a reduction in the Company's LIFO reserve.

Selling, general and administrative (SG&A) expenses for 2002 were $1.30 billion compared with $1.14 billion in 2001. Excluding restatement-related expenses, SG&A expenses would have been $1.29 billion in 2002 compared to $1.11 billion in 2001, resulting in an increase as a percent of net sales to 21.1 percent in 2002 compared with 20.8 percent in 2001. This increase is primarily the result of increased store labor costs and increased workers' compensation expense. The Company invested additional funds in store labor during the year to improve store execution.

In 2002, interest expense was $42.6 million compared with $45.8 million in 2001. As of January 31, 2003, the Company's total outstanding debt was $346.5 million, a decrease of $388.6 million compared with $735.1 million outstanding as of February 1, 2002.

The Company's effective income tax rates for 2002 and 2001 were 36.1 percent and 36.7 percent, respectively. The lower effective tax rate in 2002 relates to recording higher targeted jobs tax credits and the favorable resolution of certain state tax matters in 2002.

Merchandise inventories decreased to $1.12 billion at January 31, 2003, from $1.13 billion at February 1, 2002 with 573 additional stores, resulting in a 10 percent decrease on a per store basis. Average retail inventory turns increased to 3.6 turns from 3.2 turns in 2001.

Capital expenditures for 2002 totaled $134.3 million compared with $125.4 million for 2001. During the year, the Company opened 622 new stores, relocated or remodeled 73 stores and closed 49 stores. At year-end, the Company operated 6,113 stores with approximately 41.2 million selling square feet.

Additional significant accomplishments during the year included:

  • Implementation of item-level inventories in all stores, improving the Company's ability to manage inventories.
  • Expansion of the perishable foods/cooler program from 411 stores to 1,367 stores at year-end.
  • Utilization of the new Arthur merchandising system in the 2003 merchandise planning process which should lead to improved allocation of inventories to the stores.
  • Implementation of automatic replenishment of all core merchandise in approximately 175 stores to improve operational efficiencies and increase store inventory in-stock levels.
  • Improvements in the order cycle decreasing the time between store order and receipt of merchandise by 24 to 48 hours.
Fourth Quarter Financial Results

Net income in the fourth quarter of 2002 was $108.1 million, or $0.32 per diluted share, compared with net income of $97.4 million, or $0.29 per diluted share, during the fourth quarter of 2001. Excluding pre-tax restatement-related expenses of $1.0 million in 2002 and $10.1 million in 2001, net income increased 5.1 percent to $109.3 million, or $0.33 per diluted share compared with $104.0 million, or $0.31 per diluted share last year.

Total sales for the 2002 fourth quarter increased 10.9 percent to $1.76 billion from $1.59 billion in the prior year, including a same store sales increase of 2.1 percent. Gross profit increased to $528.0 million from $475.5 million, or 30.0 percent of net sales in both periods. SG&A expenses were $350.4 million in 2002 compared with $312.6 million during the comparable period in the prior year. Excluding restatement-related expenses, SG&A expenses would have been $349.4 million, or 19.9 percent of net sales in 2002 compared to $302.5 million, or 19.1 percent of net sales in 2001.

2003 Outlook

The Company projects revenues in 2003 to increase 13 to 15 percent and earnings, excluding restatement-related items, to increase 11 to 15 percent. In 2003, the Company expects same-store sales to increase 4 to 6 percent. The Company currently anticipates opening approximately 650 new stores in the current 27-state market area, closing 50 to 70 stores, and remodeling or relocating approximately 145 stores. The Company currently expects to incur capital expenditures during 2003 of approximately $165 million. The Company anticipates that its existing cash balances, cash flow from operations, and borrowings under its existing financing facilities will provide sufficient resources to meet these expenditures.

Significant goals for 2003 include the following:

  • Improve store manager training with the completion of 35 training centers. The Company currently has 18 new manager training centers in operation and expects to have the remaining centers open before summer.
  • Reduce inventory shrink.
  • Increase the number of stores on automatic replenishment to as many as 2,500.
  • Expand perishable food program to an additional 1,000 stores.
  • Test acceptance of debit, credit and EBT cards.
  • Determine site for new distribution center to accommodate future growth.
Conference Call

The Company will host a conference call today at 10 a.m. EST. The passcode for the conference call is "Dollar General." If you wish to participate, please call 816-650-0741 at least 10 minutes before the conference call is scheduled to begin. The call will also be broadcast live online at www.dollargeneral.com. A replay of the conference call will be available through March 24, 2003, online or by calling 402-220-2491. The access number for the replay is 15800271.

In accordance with the interpretations of the staff of the Securities and Exchange Commission and the normal procedures of the Company's auditors, the Company's financial statements for the 2002 fiscal year will not be deemed to have been issued until the Company's Annual Report on Form 10-K is filed and, as a result, the Company's financial statements will necessarily remain subject to adjustment until such filing.

This press release contains forward-looking information, including but not limited to information regarding the 2003 Company outlook, including without limitation, annual sales and earnings guidance, growth targets, capital expenditures and key goals. The words "believe," "anticipate," "project," "plan," "expect," "estimate," "objective," "forecast," "goal," "intend," "will likely result," or "will continue" and similar expressions generally identify forward-looking statements. 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. A number of factors may result in actual results differing from such forward-looking information including, but not limited to: the Company's ability to maintain adequate liquidity through its cash resources and credit facilities; the Company's ability to comply with the terms of the Company's credit facilities (or obtain waivers for non-compliance); transportation and distribution delays or interruptions; inventory risks due to shifts in market demand; changes in product mix; interruptions in suppliers' businesses; costs and potential problems and interruptions associated with implementation of new or upgraded systems and technology; fuel price and interest rate fluctuations; a deterioration in general economic conditions caused by acts of war or terrorism; temporary changes in demand due to weather patterns; delays associated with building, opening and operating new stores; the impact of the SEC inquiry related to the restatement of certain of the Company's financial statements; and other factors specified in the Company's SEC filings from time to time.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. 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.
                  Consolidated Balance Sheets (In thousands)

                                                  January 31,      February 1,
                                                     2003            2002

    Current assets:
     Cash and cash equivalents                       $121,318       $261,525
     Merchandise inventories                        1,123,031      1,131,023
     Deferred income taxes                             33,860        105,091
     Other current assets                              45,699         58,408

           Total current assets                     1,323,908      1,556,047

     Property and equipment, at cost                1,577,823      1,473,693
     Less accumulated depreciation and amortization   584,001        484,778

           Net property and equipment                 993,822        988,915
     Other assets                                      15,423          7,423

           Total assets                            $2,333,153     $2,552,385

    Current liabilities:
     Current portion of long-term obligations         $16,209       $395,675
     Accounts payable                                 341,303        322,463
     Accrued expenses and other                       239,898        242,780
     Income taxes payable                              67,091         10,633
     Litigation settlement payable                         --        162,000

           Total current liabilities                  664,501      1,133,551

    Long-term obligations                             330,337        339,470
    Deferred income taxes                              50,247         37,646

    Shareholders' equity:
     Preferred stock                                       --             --
     Common stock                                     166,670        166,359
     Additional paid-in capital                       313,269        301,848
     Retained earnings                                812,220        579,265
     Accumulated other comprehensive loss              (1,349)        (3,228)

                                                    1,290,810      1,044,244
    Less other shareholders' equity                     2,742          2,526

    Total shareholders' equity                      1,288,068      1,041,718

    Total liabilities and shareholders' equity     $2,333,153     $2,552,385

                      Consolidated Statements of Income
               (Amounts in thousands except per share amounts)

                                             Year Ended
                         January 31,    % of Net    February 1,      % of Net
                            2003         Sales         2002            Sales

    Net sales            $6,100,404       100.0%   $5,322,895         100.0%
    Cost of goods sold    4,376,138        71.7     3,813,483          71.6

      Gross profit        1,724,266        28.3     1,509,412          28.4
    Selling, general and
      expenses            1,296,542        21.3     1,135,801          21.3
    Litigation settlement
     and related proceeds   (29,541)       (0.5)           --            --

      Operating profit      457,265         7.5       373,611           7.0

    Interest expense         42,639         0.7        45,789           0.9

      Income before income
       taxes                414,626         6.8       327,822           6.2
    Provision for taxes
     on income              149,680         2.5       120,309           2.3

      Net income           $264,946         4.3%     $207,513           3.9%

    Diluted earnings
     per share               $ 0.79                    $ 0.62

    Diluted shares
     outstanding            335,050                   335,017

    Dividends per share      $0.128                    $0.128

                Consolidated Statements of Income (Unaudited)
               (Amounts in thousands except per share amounts)

                                    Quarter (13 Weeks) Ended

                        January 31,     % of       February 1,       % of
                           2003        Net Sales       2002        Net Sales

    Net sales          $ 1,759,563        100.0%  $1,586,012         100.0%
    Cost of goods sold   1,231,599         70.0    1,110,489          70.0

      Gross profit         527,964         30.0      475,523          30.0
    Selling, general and
      expenses             350,419         19.9      312,639          19.7

      Operating profit     177,545         10.1      162,884          10.3
    Interest expense         9,333          0.5       10,752           0.7

      Income before income
       taxes               168,212          9.6      152,132           9.6
    Provision for income
     taxes                  60,126          3.4       54,689           3.5

      Net income          $108,086          6.1%     $97,443           6.1%

    Diluted earnings per
     share                   $0.32                     $0.29

    Diluted shares
     outstanding           334,659                   334,625

    Dividends per share      $.032                     $.032

             Consolidated Statements of Cash Flows(In thousands)

                                                           Year Ended
                                                   January 31,    February 1,
                                                      2003            2002
    Cash flows from operating

    Net income                                     $ 264,946       $207,513
    Adjustments to reconcile net income to net
     cash provided by operating activities:
      Depreciation and amortization                  134,959        122,967
      Deferred income taxes                           82,867          7,743
      Tax benefit from stock option exercises          2,372          5,819
      Litigation settlement                         (162,000)            --
      Change in operating assets and liabilities:
        Merchandise inventories                        7,992       (118,788)
        Other current assets                          12,566        (13,540)
        Accounts payable                              18,840         25,201
        Accrued expenses and other                    14,610         25,907
        Income taxes                                  56,458         (5,907)
        Other                                            430          8,713
          Net cash provided by operating activities  434,040        265,628

    Cash flows from investing activities:
      Purchase of property and equipment            (134,315)      (125,365)
      Proceeds from sale of property and equipment       481          1,293
          Net cash used in investing activities     (133,834)      (124,072)

    Cash flows from financing activities:
      Repayments of long-term obligations           (397,094)       (11,823)
      Payments of cash dividends                     (42,638)       (42,517)
      Proceeds from exercise of stock options          5,021         12,268
      Other financing activities                      (5,702)          (269)

          Net cash used in financing activities     (440,413)       (42,341)

     Net increase (decrease) in cash and cash
      equivalents                                   (140,207)        99,215
     Cash and cash equivalents, beginning of year    261,525        162,310

     Cash and cash equivalents, end of year         $121,318       $261,525

                       Selected Additional Information

                       Sales by Category (in thousands)

                             Quarter Ended                Year Ended

                 January 31, February 1,    %   January 31, February 1,    %
                      2003         2002   Change      2003        2002  Change

    Consumable    $971,311     $829,770    17%  $3,674,928  $3,085,112    19%
    Seasonal       366,949      349,350     5%     994,252     888,263    12%
    Clothing       179,419      171,352     5%     622,706     581,800     7%
    Home           241,884      235,540     3%     808,518     767,720     5%
       sales    $1,759,563   $1,586,012    11%  $6,100,404  $5,322,895    15%

                              New Store Activity

                                             Year Ended          Year Ended
                                          January 31, 2003    February 1, 2002

    Beginning store count                        5,540                5,000
    New store openings                             622                  602
    Store closings                                  49                   62
    Net new stores                                 573                  540
    Remodeled or relocated                          73                   78
    Ending store count                           6,113                5,540
    Total selling square footage (000's)        41,205               37,414

                          Customer Transaction Data

                             Quarter Ended                       Year
                     January 31,      February 1,     January 31,  February 1,
                           2003             2002            2003         2002

    Same-store customer
     transactions           1.8%             6.2%            5.2%         5.7%
    Average customer
     transaction           $8.97            $8.91           $8.50        $8.43

SOURCE Dollar General Corporation

CONTACT: Investors, Emma Jo Kauffman, +1-615-855-5525, or Media, Andrea Ewin Turner, +1-615-855-5209

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