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 the First Quarter of 2003

May 29, 2003

GOODLETTSVILLE, Tenn., May 29, 2003 /PRNewswire-FirstCall via COMTEX/ -- Dollar General Corporation (NYSE: DG) today reported that net income for the first quarter of fiscal 2003 increased 31.4 percent to $60.3 million, or $0.18 per diluted share, compared with $45.9 million, or $0.14 per diluted share, in the first quarter of fiscal 2002. The Company incurred approximately $0.3 million and $5.3 million in restatement-related expenses in the first quarters of 2003 and 2002, respectively. Excluding the restatement-related expenses from both years, net income during the current year period increased by 22.8 percent to $60.5 million, or $0.18 per diluted share, as compared against net income of $49.3 million, or $0.15 per diluted share, in the comparable prior year period.

"I am pleased to report the results of our first quarter. These results are the culmination of a lot of hard work over the last two years," said David A. Perdue, chief executive officer. "I am particularly encouraged by some of the systems improvements that have been made, giving us better information, which should help us improve gross margin and inventory management."

Net sales during the first quarter of 2003 were $1.57 billion as compared against $1.39 billion in the first quarter of 2002, an increase of 12.9 percent. The increase resulted primarily from 598 net new stores and a same-store sales increase of 4.2 percent.

Gross profit during the current year period was $451.9 million, or 28.8 percent of sales, versus $380.3 million, or 27.4 percent of sales, during the comparable period in the prior year. The improvement in gross margin is primarily the result of a higher average markup on inventory purchases and, to a lesser extent, a reduction in damaged product markdowns in the current year period. The higher average markup was due to a number of factors, including increased purchases of higher margin merchandise, including seasonal items and housewares, a decrease in the percentage of lower margin items purchased, including paper and home cleaning products, and the shifting of the purchase of certain products from domestic to imported sources. Inventory shrinkage, calculated at the retail value of the inventory, as a percentage of net sales, was approximately 3.1 percent in the first quarters of 2003 and 2002.

Selling, general and administrative expenses ("SG&A") during the current year period were $349.0 million, or 22.2 percent of sales, versus $297.3 million, or 21.4 percent of sales, during the comparable period in the prior year. Excluding the restatement-related expenses noted above, SG&A would have been $348.6 million, or 22.2 percent of sales, in the current year period versus $292.0 million, or 21.0 percent of sales, in the prior year period. The increase in SG&A, excluding restatement-related expenses, is primarily the result of increases in various store-related expenses, including labor, occupancy, repairs and maintenance, and utility costs. The increased store labor costs were incurred in connection with the Company's initiatives to improve store conditions.

Net interest expense during the current year period was $9.4 million versus $10.4 million in the prior year. The Company's effective tax rate was 35.5 percent in the current year period versus 36.7 percent in the comparable prior year period. The decrease in the Company's tax rate in the current year period is primarily the result of a $0.8 million adjustment to state income tax valuation reserves resulting from a tax law change. Absent this adjustment, the Company's tax rate would have been 36.4 percent.

Merchandise inventories at May 2, 2003 increased 5.8 percent over the prior year quarter end, with the increase primarily in spring and summer seasonal merchandise. The Company has made improving its inventory productivity a priority and, as a result, inventory turns on a rolling twelve-month basis increased to 3.9 times versus 3.5 times in the prior twelve-month period.

2003 Outlook

The Company projects total 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. In fiscal 2003, the Company anticipates opening a total of approximately 650 new stores in the current 27-state market area, closing 50 to 70 stores, and remodeling or relocating approximately 145 stores.

Non-GAAP Disclosures

This release refers to certain historical and future financial information not derived in accordance with generally accepted accounting principles ("GAAP"), such as selling, general and administrative expenses, diluted earnings per share and net income, which exclude the impact of restatement-related items, and the Company's adjusted effective tax rate. The Company believes that this information is useful to investors as it indicates more clearly the Company's comparative year-to-year operating results. The Compensation Committee of the Company's Board of Directors may use this information for compensation purposes to ensure that employees are not inappropriately penalized or rewarded as a result of unusual items affecting the Company's financial statements. Management may also use this information to better understand the Company's underlying operating results. We have included a reconciliation of this information to the most comparable GAAP measures, either in this release or in the accompanying reconciliation tables.

Conference Call

The Company will host a conference call on Thursday, May 29, 2003, at 10 a.m., EDT to discuss the quarter's results. 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 until 5 p.m., EDT on Thursday, June 5, online or by calling (402) 220-2491. The access number for the replay is #16900513.

Webcast of Annual Meeting

Dollar General also intends to webcast its Annual Meeting of Shareholders on Monday, June 2, 2003, at 11 a.m., EDT. The webcast will be available live on the Company's Web site at www.dollargeneral.com with a replay available until 5 p.m., EDT on June 9, 2003.

Dollar General is a Fortune 500® discount retailer with 6,329 neighborhood stores in 27 states as of May 2, 2003. Dollar General stores offer convenience and value to customers, by providing consumable basics, items that are frequently used and replenished, such as food, snacks, health and beauty aids and cleaning supplies, as well as an appealing selection of basic apparel, housewares and seasonal items at everyday low prices. The typical Dollar General store has 6,700 square feet of selling space and is located within five miles of its target customers.

This press release contains forward-looking information, including information regarding the Company's future sales and earnings outlook. 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 interruption; our ability to negotiate effectively the cost and purchase of merchandise; 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; seasonality of the Company's business; 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 risk factors discussed in our SEC filings, including in our most recent Annual Report on Form 10-K.

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)

                                     May 2,          May 3,     January 31,
                                      2003            2002          2003
                                  (Unaudited)     (Unaudited)
    Current assets:
     Cash and cash equivalents  $    75,946     $   287,424   $   121,318
     Merchandise inventories      1,200,701       1,134,449     1,123,031
     Deferred income taxes           26,664          80,974        33,860
     Other current assets            52,080          85,419        45,699

       Total current assets       1,355,391       1,588,266     1,323,908

    Property and equipment,
     at cost                      1,606,447       1,507,414     1,577,823
     Less accumulated
      depreciation and
      amortization                  618,336         515,937       584,001

       Net property and equipment   988,111         991,477       993,822

    Other assets                     12,465           8,989        15,423

       Total assets             $ 2,355,967     $ 2,588,732   $ 2,333,153

    Current liabilities:
     Current portion of
      long-term obligations     $    16,560     $   395,877   $    16,209
     Accounts payable               357,224         341,134       341,303
     Accrued expenses and other     230,288         212,590       239,898
     Income taxes payable            36,536              --        67,091
     Litigation settlement payable       --         161,000            --

       Total current liabilities    640,608       1,110,601       664,501

    Long-term obligations           326,028         336,083       330,337
    Deferred income taxes            51,584          53,388        50,247
       Total liabilities          1,018,220       1,500,072     1,045,085

    Shareholders' equity:
     Preferred stock                     --              --            --
     Common stock                   166,762         166,462       166,670
     Additional paid-in capital     314,973         302,200       313,269
     Retained earnings              860,879         625,193       812,220
     Accumulated other
      comprehensive loss             (1,311)         (2,677)       (1,349)
                                  1,341,303       1,091,178     1,290,810

     Less other shareholders'
      equity                          3,556           2,518         2,742

       Total shareholders'
        equity                    1,337,747       1,088,660     1,288,068

       Total liabilities and
        shareholders' equity    $ 2,355,967     $ 2,588,732   $ 2,333,153

                      Consolidated Statements of Income
                   (In thousands, except per share amounts)

                                            13 Weeks Ended
                            May 2,       % of Net     May 3,        % of Net
                             2003          Sales       2002           Sales

    Net sales          $ 1,569,064         100.0% $ 1,389,412         100.0%
    Cost of goods sold   1,117,158          71.2    1,009,120          72.6
      Gross profit         451,906          28.8      380,292          27.4

    Selling, general
     and administrative
     expenses              348,955          22.2      297,304          21.4
      Operating profit     102,951           6.6       82,988           6.0

    Interest expense, net    9,411           0.6       10,432           0.8
      Income before
       income taxes         93,540           6.0       72,556           5.2
    Provision for taxes
     on income              33,208           2.1       26,628           1.9

      Net income       $    60,332           3.8% $    45,928           3.3%

    Diluted earnings
     per share         $      0.18                $      0.14

    Diluted shares
     outstanding           334,597                    334,834

    Dividends per
     share             $     0.035                $     0.032

                    Consolidated Statements of Cash Flows
                                (In thousands)

                                                         13 Weeks Ended
                                                      May 2,         May 3,
                                                       2003           2002
    Cash flows from operating activities:
     Net income                                     $ 60,332      $  45,928
     Adjustments to reconcile net income to
      net cash provided by (used in)
      operating activities:
       Depreciation and amortization                  36,756         32,004
       Deferred income taxes                           8,500         39,859
       Tax benefit from stock option exercises           224            689
       Change in operating assets and liabilities:
        Merchandise inventories                      (77,670)        (3,426)
        Other current assets                          (6,381)         1,500
        Accounts payable                              15,921         18,671
        Accrued expenses and other                    (9,198)       (19,775)
        Income taxes                                 (30,555)       (39,464)
        Other                                          1,763         (1,166)
          Net cash provided by (used in)
           operating activities                         (308)        74,820

    Cash flows from investing activities:
     Purchase of property and equipment              (30,129)       (34,812)
     Proceeds from sale of property and equipment         66             58
          Net cash used in investing activities      (30,063)       (34,754)

    Cash flows from financing activities:
     Repayments of long-term obligations              (4,086)        (3,196)
     Payment of cash dividends                       (11,673)       (10,646)
     Proceeds from exercise of stock options             694          1,374
     Other financing activities                           64         (1,699)
          Net cash used in financing activities      (15,001)       (14,167)

    Net increase (decrease) in cash and cash
     equivalents                                     (45,372)        25,899
    Cash and cash equivalents, beginning of period   121,318        261,525

    Cash and cash equivalents, end of period        $ 75,946      $ 287,424

    Supplemental schedule of noncash
     investing and financing activities:
    Purchase of property and equipment under
     capital lease obligations                      $    117      $      --

                    Reconciliation of Non-GAAP Disclosures
                   (In thousands, except per share amounts)

                                                         13 Weeks Ended
                                                   May 2, 2003   May 3, 2002
    Net Income and Earnings Per Share
    Net income in accordance with GAAP              $ 60,332       $ 45,928
    Restatement-related expenses in SG&A                 329          5,319
    Tax effect of restatement-related expenses          (120)        (1,952)
    Total restatement-related items, net of tax          209          3,367
    Net income, excluding restatement-related items $ 60,541       $ 49,295

    Weighted average diluted shares outstanding      334,597        334,834
    Diluted earnings per share,
     excluding restatement-related items            $   0.18       $   0.15

    Selling, General and Administrative Expenses
    SG&A in accordance with GAAP                    $348,955       $297,304
      Less restatement-related expenses                  329          5,319
    SG&A, excluding restatement-related expenses    $348,626       $291,985

    SG&A, excluding restatement-related
     expenses % to sales                               22.2%          21.0%

                                                           Guidance Range
                                          Fiscal        Fiscal         Fiscal
                                           2002          2003           2003

    Annual Outlook
    Net income in accordance with
     GAAP                              $ 264,946     $ 276,585      $ 288,585

    Restatement-related items:
      Litigation settlement and
       related proceeds                  (29,541)           --             --
      Restatement-related items in SG&A    6,395         1,500          1,500
                                         (23,146)        1,500          1,500
      Tax effect                           9,073          (585)          (585)
    Total restatement-related items,
     net of tax                          (14,073)          915            915
    Net income, excluding
     restatement-related items         $ 250,873     $ 277,500      $ 289,500

    % increase over 2002, excluding
     restatement-related items                             11%            15%

      Weighted average diluted shares
       outstanding                       335,050

    Net income per share, excluding
     restatement-related items         $    0.75

                       Selected Additional Information

                       Sales by Category (in thousands)

                                                13 Weeks Ended
                                  May 2, 2003     May 3, 2002      % Change

    Highly consumable           $   990,030     $   851,236         16.3%
    Seasonal                        237,119         204,763         15.8%
    Home products                   199,469         191,112          4.4%
    Basic clothing                  142,446         142,301          0.1%
     Total sales                $ 1,569,064     $ 1,389,412         12.9%

                              New Store Activity

                                                 13 Weeks Ended
                                           May 2, 2003    May 3, 2002

    Beginning store count                     6,113          5,540
    New store openings                          223            200
    Store closings                                7              9
    Net new stores                              216            191
    Ending store count                        6,329          5,731
    Total selling square footage (000's)     42,761         38,640

                          Customer Transaction Data

                                                 13 Weeks Ended
                                             May 2,          May 3,
                                              2003            2002

    Same-store customer transactions         +3.5%           +5.5%
    Average customer transaction amount      $8.42           $8.31

SOURCE Dollar General Corporation

Investor - Emma Jo Kauffman, +1-615-855-5525, Media - Andrea Ewin Turner, +1-615-855-5209, both of Dollar General Corporation


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