10-KPeriod: FY2014

DOLLAR GENERAL CORP Annual Report, Year Ended Jan 31, 2014

Filed March 20, 2014For Securities:DG

Summary

Dollar General Corporation's 2014 10-K filing highlights a year of solid growth, with net sales increasing 9.2% to $17.5 billion, driven by a 3.3% same-store sales increase and the opening of 650 new stores. The company's strategic expansion into tobacco and expanded perishables offerings positively impacted customer traffic and transaction amounts, though it slightly compressed gross profit margins. Operating profit saw a 4.9% increase, and net income grew 7.6% to $1.03 billion, translating to diluted earnings per share of $3.17. The company successfully managed operating expenses, with SG&A as a percentage of sales decreasing due to efficiency improvements and reduced incentive compensation. Financially, Dollar General executed a significant refinancing in April 2013, securing a new unsecured credit agreement and issuing senior notes, which improved its debt structure and reduced interest expense. The company also continued its share repurchase program, returning capital to shareholders. Looking ahead, Dollar General remains focused on its four key operating priorities: driving sales growth, enhancing gross profit rates, leveraging process improvements for cost reduction, and strengthening its culture of service. The company plans to continue its aggressive store expansion strategy, opening 700 new stores in fiscal year 2014, underscoring its confidence in its growth model and ability to serve value-conscious consumers.

Financial Highlights

44 data points
Beta

Revenue

$17.50B

31.1% Gross Margin

Net Income

$1.03B

5.9% Net Margin

EPS (Diluted)

$3.17

Total Assets

$10.87B

Cash & Equivalents

$505.57M

Free Cash Flow

$1.21B

Financial Statements
Beta
Revenue$17.50B
Cost of Revenue$12.07B
Gross Profit$5.44B
SG&A Expenses$3.70B
Operating Income$1.74B
Interest Expense$88.98M
Net Income$1.03B
EPS (Basic)$3.17
EPS (Diluted)$3.17
Shares Outstanding (Basic)322.89M
Shares Outstanding (Diluted)323.85M

Key Highlights

  • 1Net sales increased 9.2% to $17.5 billion in fiscal year 2013.
  • 2Same-store sales grew by 3.3%, indicating consistent customer demand.
  • 3The company opened 650 new stores, expanding its retail footprint.
  • 4Introduction of tobacco products and expanded perishables contributed to customer traffic and sales growth.
  • 5Net income rose 7.6% to $1.03 billion, with diluted EPS of $3.17.
  • 6Significant refinancing activities in April 2013 improved the company's debt structure and reduced interest expense.
  • 7Dollar General continued its share repurchase program, demonstrating a commitment to returning capital to shareholders.

Frequently Asked Questions

Dollar General's sales growth in fiscal year 2013 was primarily driven by a 3.3% increase in same-store sales, resulting from higher customer traffic and increased average transaction amounts. The strategic addition of tobacco products and the expansion of refrigerated and frozen food offerings (perishables) significantly contributed to customer visits and basket size. Furthermore, the opening of 650 new stores directly contributed to the overall sales increase.

The gross profit rate as a percentage of sales decreased slightly to 31.1% in fiscal year 2013 from 31.7% in fiscal year 2012. This decrease was mainly due to a higher proportion of sales coming from lower-margin consumables, particularly tobacco products and expanded perishable offerings. Additionally, an increase in inventory shrinkage contributed to the compressed margin. However, the company aims to offset this by driving higher customer traffic and sales volumes.

In April 2013, Dollar General completed a significant refinancing transaction. This included terminating its existing senior secured credit facilities and entering into a new five-year, $1.85 billion unsecured credit agreement, along with issuing new senior notes totaling approximately $1.3 billion. This refinancing aimed to improve the company's debt structure and reduce overall interest expense, which decreased by $38.9 million in 2013 compared to 2012.

Dollar General plans to continue its aggressive growth strategy in fiscal year 2014, with a target of opening 700 new stores. The company will remain focused on its four key operating priorities: driving productive sales growth, increasing gross profit rates, leveraging process improvements for cost reduction, and strengthening its culture of service. The company expects consumables to continue to be the primary driver of sales growth, supported by its value proposition tailored to its core customer base.