10-QPeriod: Q2 FY2016

DOLLAR GENERAL CORP Quarterly Report for Q2 Ended May 1, 2015

Filed June 2, 2015For Securities:DG

Summary

Dollar General Corporation (DG) reported solid financial results for the first quarter ended May 1, 2015, demonstrating continued growth and profitability. Net sales increased by 8.8% to $4.92 billion, driven by a 3.7% increase in same-store sales, indicating healthy customer traffic and transaction amounts. The company effectively managed its gross profit margin, improving it by 45 basis points to 30.5%, attributed to higher initial inventory markups, an improved shrink rate, and lower transportation costs. Net income saw a significant increase of 13.9% to $253.2 million, translating to diluted earnings per share of $0.84, up from $0.72 in the prior year period. This earnings growth was supported by a decrease in interest expense and effective share repurchases, which reduced the diluted share count. The company also generated strong operating cash flow of $343.9 million, highlighting its operational efficiency. Dollar General continued its strategic store expansion, opening 219 new stores and remodeling or relocating 291 others, underscoring its commitment to growth.

Financial Highlights

43 data points
Beta

Revenue

$4.92B

30.5% Gross Margin

Net Income

$253.24M

5.1% Net Margin

EPS (Diluted)

$0.84

Total Assets

$11.20B

Cash & Equivalents

$180.53M

Free Cash Flow

$370.21M

Financial Statements
Beta
Revenue$4.92B
Cost of Revenue$3.51B
Gross Profit$1.50B
SG&A Expenses$1.11B
Operating Income$428.19M
Interest Expense$20.70M
Net Income$253.24M
EPS (Basic)$0.84
EPS (Diluted)$0.84
Shares Outstanding (Basic)295.68M
Shares Outstanding (Diluted)296.53M

Key Highlights

  • 1Net sales increased 8.8% to $4.92 billion, with same-store sales up 3.7%.
  • 2Gross profit margin improved by 45 basis points to 30.5% due to better inventory management and lower transportation costs.
  • 3Net income rose 13.9% to $253.2 million, and diluted EPS increased to $0.84 from $0.72.
  • 4Operating cash flow strengthened significantly, reaching $343.9 million, up from $251.5 million in the prior year.
  • 5The company returned value to shareholders through $66.0 million in cash dividends and continued its share repurchase program, buying back $534.7 million in stock.
  • 6Dollar General expanded its store base, opening 219 new stores and remodeling/relocating 291 stores, ending the quarter with 11,999 locations.

Frequently Asked Questions

Net sales increased by 8.8% to $4.92 billion, primarily driven by a 3.7% increase in same-store sales. This growth was fueled by higher customer traffic and an increased average transaction amount, with notable contributions from consumables like tobacco products, perishables, health care items, and candy/snacks, as well as growth in apparel, seasonal, and home products.

The gross profit margin increased by 45 basis points to 30.5%. This improvement was mainly due to higher initial markups on inventory purchases, a reduction in inventory shrinkage, and lower transportation costs, partly aided by lower fuel rates.

Dollar General remains committed to store growth, opening 219 new stores in the first quarter of 2015. The company plans to open approximately 730 new stores for the full year and continued its store remodeling and relocation efforts, impacting 291 stores in the quarter.

The company generated strong operating cash flow of $343.9 million and maintained a cash balance of $225.1 million at the end of the quarter. It anticipates sufficient liquidity from operations, cash reserves, and its revolving credit facility to fund its obligations and capital expenditures. The company also continued its share repurchase program and initiated dividend payments.