10-KPeriod: FY2019

DOLLAR GENERAL CORP Annual Report, Year Ended Feb 1, 2019

Filed March 22, 2019For Securities:DG

Summary

Dollar General Corporation's 2018 10-K filing highlights a company with a robust business model focused on providing essential, everyday items at low prices in convenient locations. The company operates over 15,000 stores across 44 states, demonstrating significant scale and reach within the U.S. discount retail market. A key strength is its 29th consecutive year of positive same-store sales growth, indicating strong customer loyalty and a resilient value proposition that appeals across various economic conditions. Financially, the company shows consistent revenue growth, with a 9.2% increase in net sales for fiscal year 2018 compared to 2017, driven primarily by an increase in average transaction amount and new store openings. While gross profit margin saw a slight decrease due to higher markdowns and a shift towards lower-margin consumables, operating profit and net income showed positive growth. Dollar General also continues to return capital to shareholders through dividends and share repurchases, underscoring its commitment to shareholder value. The company is actively investing in strategic initiatives, including new store development, remodels, and technological enhancements, to sustain its growth trajectory and competitive position.

Financial Highlights

47 data points
Beta

Revenue

$25.63B

30.5% Gross Margin

Net Income

$1.59B

6.2% Net Margin

EPS (Diluted)

$5.97

Total Assets

$13.20B

Cash & Equivalents

$235.49M

Free Cash Flow

$2.14B

Financial Statements
Beta
Revenue$25.63B
Cost of Revenue$17.82B
Gross Profit$7.80B
SG&A Expenses$5.69B
Operating Income$2.12B
Interest Expense$99.87M
Net Income$1.59B
EPS (Basic)$5.99
EPS (Diluted)$5.97
Shares Outstanding (Basic)265.15M
Shares Outstanding (Diluted)266.11M

Key Highlights

  • 1Operates a large network of 15,472 discount retail stores across 44 states, with a strong concentration in the southern, southwestern, midwestern, and eastern U.S.
  • 2Achieved 29 consecutive years of positive same-store sales growth, demonstrating a consistently effective value and convenience proposition for its customers.
  • 3Reported a 9.2% increase in net sales for fiscal year 2018 to $25.6 billion, driven by a 3.2% same-store sales increase and new store expansion.
  • 4Generated $2.14 billion in cash flow from operations in fiscal year 2018, a 18.9% increase over the prior year, supporting investments, share repurchases, and dividends.
  • 5Continues to invest in growth through store expansion, with plans to open approximately 975 new stores and remodel approximately 1,000 stores in fiscal year 2019.
  • 6Returned capital to shareholders through $1.0 billion in share repurchases and $1.16 per share in dividends for fiscal year 2018.
  • 7Focuses on long-term operating priorities: driving profitable sales growth, capturing growth opportunities, enhancing its low-cost operator position, and investing in its people.

Frequently Asked Questions

Dollar General's core strategy is to provide a broad selection of everyday and household needs, supplemented by general merchandise, at everyday low prices (typically $10 or less) in convenient, small-box locations. Their value proposition emphasizes saving customers time and money, appealing to a wide base of value-conscious consumers.

In fiscal year 2018, Dollar General reported a 9.2% increase in net sales to $25.6 billion, driven by a 3.2% growth in same-store sales and new store openings. Operating profit grew by 5.4% to $2.12 billion, and net income increased to $1.59 billion, or $5.97 per diluted share. The company generated strong operating cash flow of $2.14 billion.

Dollar General plans to continue its store expansion by opening approximately 975 new stores and remodeling about 1,000 stores in fiscal year 2019. They are also investing in strategic initiatives such as 'DG Fresh' (a self-distribution model for fresh and frozen products) and 'Fast Track' (to enhance in-store labor productivity and convenience), as well as leveraging digital tools to enhance the customer experience.

Key risks include economic factors impacting their value-conscious customer base, intense retail competition, managing inventory levels effectively, maintaining the security of customer and company data, disruptions to their supply chain, and the potential for increased costs related to labor, tariffs, and compliance with regulations. Their reliance on a large number of stores and a broad customer base also presents unique operational challenges.