10-KPeriod: FY2010

DOLLAR GENERAL CORP Annual Report, Year Ended Jan 29, 2010

Filed March 31, 2010For Securities:DG

Summary

Dollar General Corporation's 2010 10-K filing reveals a company in strong growth and operational improvement, exiting fiscal year 2009 with significant increases in sales and profitability. The company emphasizes its value and convenience proposition, which has resonated with customers, leading to a 20th consecutive year of same-store sales growth. Key financial highlights include a 12.8% increase in total sales, driven by a robust 9.5% same-store sales growth, and a significant improvement in gross profit margins. The company has also successfully managed its cost structure, leading to a decrease in SG&A as a percentage of sales, even with IPO-related expenses. Operationally, Dollar General is focused on expanding its store base, planning to open 600 new stores in fiscal year 2010, in addition to remodeling and relocating existing ones. The company's strategic priorities include driving productive sales growth, increasing gross margins through category management and sourcing efficiencies, leveraging technology for cost reduction, and strengthening its corporate culture. Despite substantial debt, the company has made progress in deleveraging, using proceeds from its recent IPO to redeem a significant portion of its long-term obligations.

Financial Highlights

27 data points
Beta

Revenue

$11.80B

31.3% Gross Margin

Net Income

$339.44M

2.9% Net Margin

EPS (Diluted)

$1.04

Cash & Equivalents

$222.08M

Free Cash Flow

$672.82M

Financial Statements
Beta
Revenue$11.80B
Cost of Revenue$8.11B
Gross Profit$3.69B
SG&A Expenses$2.74B
Operating Income$953.26M
Interest Expense$345.74M
Net Income$339.44M
EPS (Basic)$1.05
EPS (Diluted)$1.04
Shares Outstanding (Basic)322.78M
Shares Outstanding (Diluted)324.84M

Key Highlights

  • 120th consecutive year of same-store sales growth, indicating a resilient business model.
  • 2Total sales increased by 12.8% in fiscal year 2009, with same-store sales growing by 9.5%.
  • 3Gross profit margin improved by 201 basis points to 31.3% in fiscal year 2009 due to increased markups, volume efficiencies, and shrink reduction.
  • 4SG&A expenses as a percentage of sales decreased by 21 basis points to 23.2%, despite significant IPO-related costs.
  • 5Plans to open approximately 600 new stores in fiscal year 2010, continuing aggressive expansion.
  • 6Successfully used IPO proceeds to reduce long-term debt by $400.9 million.
  • 7Net income increased to $339.4 million in fiscal year 2009, up from $108.2 million in fiscal year 2008.

Frequently Asked Questions

Dollar General's strategy is to provide a broad selection of everyday necessities and general merchandise at everyday low prices (typically $10 or less) in convenient, small-box locations. They focus on a strong value and convenience proposition to attract and retain their value-conscious customer base.

The company reported strong financial performance, with total sales increasing by 12.8% to $11.8 billion. Same-store sales grew by 9.5%. Net income rose significantly to $339.4 million from $108.2 million in the prior year, driven by improved gross margins and effective cost management.

Dollar General's growth is driven by increasing store sales, expanding operating profit rates, and growing its store base. They plan to open approximately 600 new stores in fiscal year 2010 and are focused on improving store productivity, expanding private brands, and optimizing sourcing for margin enhancement.

Dollar General has substantial debt. However, following its initial public offering in November 2009, the company used approximately $400.9 million of the net proceeds to redeem a portion of its Senior Notes and Senior Subordinated Notes. They also made a voluntary prepayment of $325 million on their senior secured term loan facility in January 2010, demonstrating a commitment to deleveraging.