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 March 3, 2023, the company’s 19,147 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 Second Quarter EPS of $0.18; Updates Fiscal 2003 Outlook
August 28, 2003
GOODLETTSVILLE, Tenn., Aug 28, 2003 /PRNewswire-FirstCall via COMTEX/ -- Dollar General Corporation (NYSE: DG) today reported net income for the second quarter of fiscal 2003 of $59.9 million, or $0.18 per diluted share, compared to $42.4 million, or $0.13 per diluted share, in the second quarter of fiscal 2002, an increase of 41.5 percent. Excluding restatement-related items from the prior year's results, net income in the quarter increased 53.4 percent when compared against net income of $39.1 million, or $0.12 per diluted share, in 2002. In the second quarter of 2002, the Company recorded approximately $5.2 million of restatement-related pre-tax income, primarily from insurance proceeds.
Net sales during the second quarter increased 13.6 percent to $1.65 billion compared to $1.45 billion in the second quarter of 2002. The increase resulted primarily from 588 net new stores and a same-store sales increase of 4.7 percent.
Gross profit during the quarter was $472.8 million, or 28.6 percent of sales, versus $387.4 million, or 26.7 percent of sales, in the prior year. The increase in the gross margin rate as a percent to sales is primarily attributable to a higher average markup on inventory purchases in all four of the Company's merchandise categories. The Company's provision for inventory shrinkage, calculated at the retail value of the inventory, as a percentage of net sales, decreased to 3.05 percent in the second quarter of 2003 from 3.61 percent in 2002. In addition, damaged product markdowns decreased from the prior year quarter.
Selling, general and administrative expenses ("SG&A") for the quarter were $371.0 million, or 22.5 percent of sales, in the current year, versus $313.7 million, or 21.6 percent of sales, in the prior year. The increase in SG&A as a percent to sales is primarily due to increases in workers' compensation and general liability costs, costs related to the departure of two officers of the Company, increases in store occupancy and utilities costs, and an increase in the accrual for bonuses resulting from the Company's strong financial performance in the first half of the year.
Net interest expense during the current year period decreased by 30.3 percent to $7.9 million in the current year quarter compared to $11.3 million in the prior year. The decrease is primarily attributable to lower average debt outstanding in the current year quarter. The Company had $289.4 million in debt outstanding at August 1, 2003, compared to $521.8 million at August 2, 2002.
For the 26-week year-to-date period, net income was $120.3 million in fiscal 2003, or $0.36 per diluted share, compared to $88.3 million, or $0.26 per diluted share, in the comparable prior year period, an increase of 36.2 percent. Excluding net restatement-related items from both years, year-to-date net income increased 36.4 percent to $120.5 million, or $0.36 per diluted share, in fiscal 2003 compared to net income of $88.4 million, or $0.26 per diluted share, in the comparable prior year period. Year-to-date net sales increased 13.3 percent, including a same-store sales increase of 4.5 percent.
Updated 2003 Outlook
The Company projects net income, excluding restatement-related items, to increase 15 to 20 percent for the year. The Company had previously indicated that it expected net income, excluding restatement-related items, to increase by 11 to 15 percent in 2003. Total revenues in 2003 are expected to increase 13 to 15 percent, including a same store sales increase of four to six percent. While the Company expects gross margin for the full year to be higher than in the prior year, gross margin for the fourth quarter of 2003 will likely be lower than the 30.01% gross margin reported in the fourth quarter of 2002. The annual SG&A rate to sales for 2003 is expected to be higher than in the prior year. The Company expects to open a total of approximately 650 new stores, close 50 to 70 stores, and relocate or remodel 60 to 80 stores. Capital expenditures for the year are expected to be approximately $165 million.
Conference Call
The Company will host a conference call on Thursday, August 28, 2003, at 10 a.m. ET 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. A webcast of the call can also be accessed live on Dollar General's Web site at www.dollargeneral.com by clicking on the home page spotlight item. A replay of the conference call will be available until 5 p.m. ET on Thursday, September 4, online or by calling 334-323-7226. The access code for the replay is 40954 and the pass code is 86362.
Dollar General is a Fortune 500® discount retailer with 6,479 neighborhood stores in 27 states as of August 1, 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 6,750 square feet of selling space and is located within five miles of its target customers.
Non-GAAP Disclosures
This release includes certain historical and future financial information not derived in accordance with generally accepted accounting principles ("GAAP"). This information should not be considered a substitute for any measures derived in accordance with GAAP. 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 portions of 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.
This press release contains forward-looking information, including information regarding the Company's updated 2003 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; the Company's 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.
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
August 1, August 2, January 31,
2003 2002 2003
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $102,276 $ 39,517 $121,318
Merchandise inventories 1,184,709 1,058,200 1,123,031
Deferred income taxes 22,829 25,552 33,860
Income taxes receivable -- 55,573 --
Other current assets 57,494 65,263 45,699
Total current assets 1,367,308 1,244,105 1,323,908
Property and equipment,
at cost 1,639,164 1,547,346 1,577,823
Less accumulated depreciation
and amortization 652,701 548,073 584,001
Net property and equipment 986,463 999,273 993,822
Other assets, net 11,610 21,851 15,423
Total assets $2,365,381 $2,265,229 $2,333,153
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of
long-term obligations $16,957 $ 15,132 $16,209
Accounts payable 352,717 346,786 341,303
Accrued expenses and other 255,027 219,220 239,898
Income taxes payable 9,182 -- 67,091
Total current liabilities 633,883 581,138 664,501
Long-term obligations 272,420 506,707 330,337
Deferred income taxes 56,933 46,030 50,247
Total liabilities 963,236 1,133,875 1,045,085
Shareholders' equity:
Preferred stock -- -- --
Common stock 167,345 166,670 166,670
Additional paid-in capital 331,185 312,589 313,269
Retained earnings 909,114 656,894 812,220
Accumulated other
comprehensive loss (1,266) (2,012) (1,349)
1,406,378 1,134,141 1,290,810
Less other shareholders'
equity 4,233 2,787 2,742
Total shareholders'
equity 1,402,145 1,131,354 1,288,068
Total liabilities and
shareholders' equity $2,365,381 $2,265,229 $2,333,153
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
13 Weeks Ended
August 1, % of Net August 2, % of Net
2003 Sales 2002 Sales
Net sales $1,651,094 100.00% $1,453,727 100.00%
Cost of goods sold 1,178,264 71.36 1,066,300 73.35
Gross profit 472,830 28.64 387,427 26.65
Selling, general
and administrative 370,987 22.47 313,667 21.58
Insurance proceeds -- -- (4,500) (0.31)
Operating profit 101,843 6.17 78,260 5.38
Interest expense, net 7,899 0.48 11,337 0.78
Income before
income taxes 93,944 5.69 66,923 4.60
Provision for taxes
on income 34,008 2.06 24,561 1.69
Net income $59,936 3.63% $42,362 2.91%
Earnings per share:
Basic $0.18 $0.13
Diluted $0.18 $0.13
Weighted average shares:
Basic 333,871 333,067
Diluted 336,841 335,737
Dividends per share $0.035 $0.032
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
26 Weeks Ended
August 1, % of Net August 2, % of Net
2003 Sales 2002 Sales
Net sales $3,220,158 100.00% $2,843,139 100.00%
Cost of goods sold 2,295,422 71.28 2,075,420 73.00
Gross profit 924,736 28.72 767,719 27.00
Selling, general
and administrative 719,942 22.36 610,971 21.49
Insurance proceeds -- -- (4,500) (0.16)
Operating profit 204,794 6.36 161,248 5.67
Interest expense, net 17,310 0.54 21,769 0.77
Income before
income taxes 187,484 5.82 139,479 4.90
Provision for taxes
on income 67,216 2.09 51,189 1.80
Net income $120,268 3.73% $88,290 3.10%
Earnings per share:
Basic $0.36 $0.27
Diluted $0.36 $0.26
Weighted average shares:
Basic 333,557 332,866
Diluted 335,719 335,286
Dividends per share $0.070 $0.064
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
26 Weeks Ended
August 1, August 2
2003 2002
Cash flows from operating activities:
Net income $120,268 $88,290
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 74,883 66,019
Deferred income taxes 17,657 87,296
Tax benefit from stock option exercises 3,139 2,120
Litigation settlement -- (162,000)
Change in operating assets and liabilities:
Merchandise inventories (61,678) 72,823
Other current assets (11,795) (13,675)
Accounts payable 11,414 24,323
Accrued expenses and other 15,930 (11,206)
Income taxes (57,909) (59,464)
Other 1,756 (13,914)
Net cash provided by
operating activities 113,665 80,612
Cash flows from investing activities:
Purchase of property and equipment (65,874) (70,445)
Purchase of promissory notes (49,582) --
Proceeds from sale of property and equipment 141 127
Net cash used in investing activities (115,315) (70,318)
Cash flows from financing activities:
Net borrowings under revolving credit facilities -- 170,000
Repayments of long-term obligations (7,979) (389,561)
Payment of cash dividends (23,374) (21,307)
Proceeds from exercise of stock options 14,214 4,509
Other financing activities (253) 4,057
Net cash used in financing activities (17,392) (232,302)
Net decrease in cash and cash equivalents (19,042) (222,008)
Cash and cash equivalents, beginning of period 121,318 261,525
Cash and cash equivalents, end of period $102,276 $39,517
Supplemental schedule of noncash investing
and financing activities:
Purchase of property and equipment under
capital lease obligations $427 $6,233
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP Disclosures
(In thousands, except per share amounts)
(Unaudited)
13 Weeks Ended 26 Weeks Ended
August 1, August 2, August 1, August 2,
2003 2002 2003 2002
Net Income and Earnings
Per Share
Net income in accordance
with GAAP $59,936 $42,362 $120,268 $88,290
Restatement-related items
in SG&A 39 (695) 369 4,623
Restatement-related
insurance proceeds -- (4,500) -- (4,500)
Total restatement-related
items 39 (5,195) 369 123
Tax effect (14) 1,907 (133) (45)
Total restatement-related
items, net of tax 25 (3,288) 236 78
Net income, excluding
restatement-related
items $59,961 $39,074 $120,504 $88,368
Weighted average
diluted shares
outstanding 336,841 335,737 335,719 335,286
Diluted earnings per share,
excluding
restatement-related items $0.18 $0.12 $0.36 $0.26
Selling, General and
Administrative Expenses
SG&A in accordance with
GAAP $370,987 $313,667 $719,942 $610,971
Less
restatement-related
items 39 (695) 369 4,623
SG&A, excluding
restatement-related
items $370,948 $314,362 $719,573 $606,348
SG&A, excluding
restatement-related
items % to sales 22.5% 21.6% 22.3% 21.3%
Guidance Range
Fiscal Fiscal Fiscal
2002 2003 2003
Annual Outlook
Net income in accordance with
GAAP $264,946 $286,950 $301,450
Restatement-related items:
Litigation settlement and
related proceeds (29,541) -- --
Restatement-related items in
SG&A 6,395 900 900
(23,146) 900 900
Tax effect 9,073 (350) (350)
Total restatement-related items,
net of tax (14,073) 550 550
Net income, excluding
restatement-related items $250,873 $287,500 $302,000
% increase over 2002,
excluding restatement-related
items 15% 20%
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
Selected Additional Information
Sales by Category (in thousands)
(Unaudited)
13 Weeks Ended 26 Weeks Ended
August 1, August 2, % August 1, August 2, %
2003 2002 Change 2003 2002 Change
Highly consumable $1,027,854 $892,507 15.2% $2,017,884 $1,743,744 15.7%
Seasonal 263,468 226,328 16.4% 500,587 431,091 16.1%
Home products 207,707 188,272 10.3% 407,176 379,383 7.3%
Basic clothing 152,065 146,620 3.7% 294,511 288,921 1.9%
Total sales $1,651,094 $1,453,727 13.6% $3,220,158 $2,843,139 13.3%
New Store Activity
(Unaudited)
26 Weeks Ended
August 1, 2003 August 2, 2002
Beginning store count 6,113 5,540
New store openings 400 372
Store closings 34 21
Net new stores 366 351
Ending store count 6,479 5,891
Total selling square footage (000's) 43,796 39,760
Customer Transaction Data
(Unaudited)
13 Weeks Ended 26 Weeks Ended
August 1, August 2, August 1, August 2,
2003 2002 2003 2002
Same-store customer transactions +4.7% +7.6% +4.1% +6.5%
Average customer purchase $8.31 $8.28 $8.36 $8.30SOURCE Dollar General Corporation
Investor - Emma Jo Kauffman, +1-615-855-5525, Media - Andrea
Turner, +1-615-855-5209, both of Dollar General Corporation
http://www.dollargeneral.com