10-QPeriod: Q3 FY2013

DOLLAR GENERAL CORP Quarterly Report for Q3 Ended Aug 3, 2012

Filed September 5, 2012For Securities:DG

Summary

Dollar General Corporation's Q2 2012 filing for the period ending August 3, 2012, reveals robust performance driven by strong sales growth and effective cost management. The company reported a significant increase in net sales to $3.95 billion, up 10.4% year-over-year, with same-store sales growing by 5.1%. This growth was supported by initiatives aimed at driving productive sales, expanding merchandise offerings, and optimizing store formats. Operating profit saw a healthy increase of 10.6%, largely due to improved SG&A leverage, which decreased as a percentage of sales. Financially, the company demonstrated strong profitability, with net income rising to $214.1 million, a substantial 46.6% increase compared to the prior year's second quarter. Diluted earnings per share also saw a significant jump to $0.64 from $0.42. The company proactively managed its debt structure, issuing new senior notes and redeeming existing subordinated debt, which contributed to a decrease in interest expense. Cash flow from operations remained strong, providing ample liquidity for ongoing initiatives. Key strategic priorities continue to focus on sales growth, gross margin improvement, cost reduction through technology, and fostering a culture of service.

Financial Highlights

42 data points
Beta

Revenue

$3.95B

32.0% Gross Margin

Net Income

$214.14M

5.4% Net Margin

EPS (Diluted)

$0.64

Total Assets

$10.10B

Cash & Equivalents

$134.16M

Free Cash Flow

$180.85M

Financial Statements
Beta
Revenue$3.95B
Cost of Revenue$2.69B
Gross Profit$1.26B
SG&A Expenses$876.01M
Operating Income$387.21M
Interest Expense$35.67M
Net Income$214.14M
EPS (Basic)$0.64
EPS (Diluted)$0.64
Shares Outstanding (Basic)333.00M
Shares Outstanding (Diluted)335.52M

Key Highlights

  • 1Net sales increased by 10.4% to $3.95 billion for the 13-week period ended August 3, 2012, compared to the prior year, driven by a 5.1% increase in same-store sales.
  • 2Net income grew significantly by 46.6% to $214.1 million for the 13-week period ended August 3, 2012.
  • 3Diluted earnings per share increased to $0.64 from $0.42 in the comparable prior-year period.
  • 4Operating profit increased by 10.6%, reflecting improved SG&A leverage.
  • 5The company issued $500 million of 4.125% senior notes and redeemed $450.7 million of senior subordinated notes, optimizing its debt structure.
  • 6Total assets grew to $10.1 billion, with merchandise inventories increasing to $2.15 billion.
  • 7The company continued its store expansion strategy, opening 295 new stores in the first half of 2012, bringing the total store count to 10,203.

Frequently Asked Questions

Dollar General's sales growth in the second quarter of 2012 was driven by a combination of factors, including a 5.1% increase in same-store sales, attributed to higher customer traffic and an increased average transaction amount. The company also benefited from its ongoing store expansion strategy, new store openings, and various merchandising and operational initiatives.

The company demonstrated effective expense management, particularly in Selling, General, and Administrative (SG&A) expenses, which decreased as a percentage of sales by 15 basis points to 22.2%. This improvement was attributed to increased efficiencies in workforce utilization, lower benefits costs, reduced workers' compensation and general liability expenses, and the favorable impact of increased sales.

During the quarter, Dollar General issued $500 million in 4.125% senior notes due 2017 and redeemed its $450.7 million in senior subordinated notes. These actions, along with amendments to its credit facilities, aimed to optimize the company's debt profile and reduce overall interest expense.

Dollar General believes it has sufficient liquidity to fund its obligations, working capital requirements, and capital expenditures. As of August 3, 2012, the company had $747.9 million available under its ABL Facility and anticipates funding its capital requirements with cash flow from operations and available credit facilities.