10-QPeriod: Q2 FY2011

DOLLAR GENERAL CORP Quarterly Report for Q2 Ended Jul 30, 2010

Filed August 31, 2010For Securities:DG

Summary

Dollar General Corporation's second quarter 2010 report shows a significant improvement in financial performance compared to the prior year. Net sales increased by 10.8% to $3.21 billion, driven by a 5.1% increase in same-store sales, attributed to higher customer traffic and average transaction amounts. This growth reflects the company's success in executing its operating priorities, including driving productive sales growth and enhancing its merchandise offerings. The company also demonstrated strong gross profit margin improvement, rising to 32.2% from 31.2% year-over-year. This was fueled by higher average markups and cost reduction initiatives. Operating profit also saw substantial growth, increasing by 29.0% to $300.8 million. Net income nearly doubled, reaching $141.2 million, or $0.41 per diluted share, a significant increase from $93.6 million, or $0.29 per diluted share, in the same period last year.

Financial Highlights

25 data points
Beta

Revenue

$3.21B

32.2% Gross Margin

Net Income

$141.19M

4.4% Net Margin

EPS (Diluted)

$0.41

Cash & Equivalents

$281.42M

Free Cash Flow

$188.09M

Financial Statements
Beta
Revenue$3.21B
Cost of Revenue$2.18B
Gross Profit$1.04B
SG&A Expenses$735.22M
Operating Income$300.76M
Interest Expense$69.33M
Net Income$141.19M
EPS (Basic)$0.41
EPS (Diluted)$0.41
Shares Outstanding (Basic)341.00M
Shares Outstanding (Diluted)344.75M

Key Highlights

  • 1Net sales increased by 10.8% to $3.21 billion, with same-store sales up 5.1%.
  • 2Gross profit margin improved to 32.2% from 31.2% in the prior year's quarter.
  • 3Operating profit increased by 29.0% to $300.8 million.
  • 4Net income rose significantly by 50.9% to $141.2 million.
  • 5Diluted earnings per share increased to $0.41 from $0.29 year-over-year.
  • 6SG&A expenses as a percentage of sales decreased to 22.9% from 23.2%, indicating improved operating leverage.
  • 7The company plans to open approximately 600 new stores in fiscal 2010, with 315 already opened in the first half.

Frequently Asked Questions

The sales increase was driven by a 5.1% rise in same-store sales, which was fueled by higher customer traffic and an increased average transaction amount. Merchandising initiatives, improved store standards, expanded product offerings, and enhanced marketing efforts also contributed to sales growth.

The gross profit margin improved due to higher average purchase markups, partially offset by increased markdowns. This was achieved through efforts to reduce merchandise purchase costs, an increased mix of private brands, improved global sourcing, and effective category management processes. Increased sales volumes also played a role.

Dollar General plans to open approximately 600 new stores in fiscal year 2010. As of July 30, 2010, 315 of these new stores had already been opened.

As of July 30, 2010, Dollar General had approximately $3.35 billion in total outstanding debt and $940.1 million available for borrowing under its asset-based revolving credit facility. The company believes its cash flow from operations, existing cash balances, and available credit will be sufficient to meet its liquidity needs for the next 12 months and beyond.