01—Abstract
Summary
Summary of the 10-K filed March 23, 2018. Cited figures are marked; the original filing is the authoritative source.
Dollar General Corporation, as of its March 23, 2018, 10-K filing, stands as a leading discount retailer in the U.S., operating over 14,600 stores across 44 states.
The company's business model is centered on providing essential everyday and household needs at "everyday low prices" (typically $10a or less) within convenient, small-box locations, catering to a value-conscious customer base, often with low or fixed incomes. This strategy has fueled 28 consecutive years of positive same-store sales growth prior to this filing. Financially, the company demonstrated solid performance in fiscal year 2017, with net sales increasing by 6.8% year-over-year, driven by a 2.7% same-store sales increase and contributions from new store openings.
While the gross profit rate saw a slight decrease due to a shift towards higher-volume, lower-margin consumables, and increased transportation costs, operating profit remained robust. A significant factor influencing net income was the impact of the Tax Cuts and Jobs Act, which led to a substantial reduction in the effective income tax rate. The company continued to prioritize shareholder returns through share repurchases and dividend payments, signaling a commitment to capital discipline and growth.
02—Key points
Key Highlights
- Operates a vast network of 14,609 stores across 44 states, positioning itself as a major U.S. discount retailer.
- Achieved 28 consecutive years of positive same-store sales growth prior to this filing, highlighting a resilient business model.
- Net sales increased by 6.8% in fiscal year 2017, driven by a 2.7% same-store sales growth and expansion through new store openings.
- Gross profit rate experienced a slight decrease due to a sales mix shift towards consumables and increased transportation costs.
- Significant reduction in effective income tax rate in 2017 due to the Tax Cuts and Jobs Act, positively impacting net income.
- Active in returning capital to shareholders through substantial share repurchases and quarterly dividend payments.
- Plans for continued growth in 2018, with approximately 900 new stores, 1,000 remodels, and 100 relocations planned.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Dollar General Corp kept $0.07.
- Revenue$23.47B100.0%
- Cost of revenue−$16.25B69.2%
- Gross profit$7.22B30.8%
- Operating costs−$5.21B22.2%
- Operating income$2.01B8.6%
- Interest, other & tax−$468.9M2.0%
- Net income$1.54B6.6%
Where FY2018 revenue went
$23.47B- Cost of revenue: $16.25B, 69% of revenue
- SG&A: $5.21B, 22% of revenue
- Net income: $1.54B, 6.6% of revenue
- Interest, other & tax: $468.9M, 2.0% of revenue
Kept 6.6% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed March 23, 2018Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $23.47B$21.99B | +6.8% |
| Cost of Revenue | $16.25B$15.20B | +6.9% |
| Gross Profit | $7.22B$6.78B | +6.5% |
| SG&A Expenses | $5.21B$4.72B | +10.5% |
| Operating Income | $2.01B$2.06B | −2.7% |
| Interest Expense | $97.04M$97.82M | −0.8% |
| Net Income | $1.54B$1.25B | +23.0% |
| EPS (Basic) | $5.64$4.45 | +26.7% |
| EPS (Diluted) | $5.63$4.43 | +27.1% |
| Shares Outstanding (Basic) | 272.75M281.32M | −3.0% |
| Shares Outstanding (Diluted) | 273.36M282.26M | −3.2% |
05—Questions
Frequently Asked Questions
What is Dollar General's core business strategy and target customer?
Dollar General's core strategy is to offer a broad selection of everyday necessities and general merchandise at "everyday low prices" (typically $10 or less) in convenient, small-box locations. Their primary target customers are value-conscious individuals and households, often with low or fixed incomes, who rely on the company for essential needs and convenience.
How did the Tax Cuts and Jobs Act impact Dollar General's financial results in 2017?
The Tax Cuts and Jobs Act, enacted in December 2017, significantly reduced the federal corporate tax rate. For Dollar General, this resulted in a provisional tax benefit of $335 million in 2017, primarily due to the remeasurement of deferred tax assets and liabilities at the new, lower rate. This substantially lowered the company's effective income tax rate for the year.
What are Dollar General's key growth initiatives for the upcoming year?
For fiscal year 2018, Dollar General plans to continue its expansion strategy by opening approximately 900 new stores, remodeling around 1,000 mature store locations, and relocating about 100 stores. They are also focusing on leveraging digital tools, refreshing non-consumables offerings, expanding cooler counts, and enhancing the customer experience through initiatives like improved store layouts and product placements.
What are the main risks Dollar General faces, as outlined in the filing?
Key risks include adverse economic conditions impacting their value-conscious customer base, intense competition, supply chain disruptions, inventory shrinkage, cybersecurity threats, and potential issues related to product liability or recalls. Additionally, changes in government regulations or the failure to successfully execute strategic initiatives are also cited as potential risks.
06—Continue