10-QPeriod: Q1 FY2017

DOLLAR GENERAL CORP Quarterly Report for Q1 Ended Apr 29, 2016

Filed May 26, 2016For Securities:DG

Summary

Dollar General Corporation reported solid performance for the first quarter ended April 29, 2016, with net sales increasing by 7.0% to $5.27 billion and same-store sales growing by 2.2%. This growth was driven by increases in both customer traffic and average transaction amounts, indicating continued customer engagement. The company demonstrated improved profitability with gross profit margin expanding to 30.6% and operating profit rising by 12.3%, reflecting effective cost management and favorable initial markups. Diluted earnings per share saw a significant increase to $1.03, up from $0.84 in the prior year's comparable quarter, primarily due to strong operational performance and a reduction in outstanding shares from the company's active share repurchase program. The company also continued its aggressive store expansion strategy, opening 249 new stores and remodeling/relocating 301 stores, underscoring its commitment to growth and market penetration. With a healthy cash flow from operations and a strong liquidity position, Dollar General appears well-positioned to execute its strategic priorities.

Financial Highlights

43 data points
Beta

Revenue

$5.27B

30.6% Gross Margin

Net Income

$295.12M

5.6% Net Margin

EPS (Diluted)

$1.03

Total Assets

$11.32B

Cash & Equivalents

$187.69M

Free Cash Flow

$403.95M

Financial Statements
Beta
Revenue$5.27B
Cost of Revenue$3.65B
Gross Profit$1.61B
SG&A Expenses$1.13B
Operating Income$480.74M
Interest Expense$24.08M
Net Income$295.12M
EPS (Basic)$1.03
EPS (Diluted)$1.03
Shares Outstanding (Basic)285.89M
Shares Outstanding (Diluted)286.98M

Key Highlights

  • 1Net sales increased by 7.0% to $5.27 billion, driven by a 2.2% increase in same-store sales, reflecting growth in both customer traffic and average transaction amount.
  • 2Gross profit margin improved by 16 basis points to 30.6%, attributed to higher initial markups and lower transportation costs.
  • 3SG&A expenses as a percentage of sales decreased by 26 basis points to 21.5%, showcasing effective cost control measures.
  • 4Diluted earnings per share rose significantly to $1.03 from $0.84 in the prior year's quarter, aided by operational improvements and share repurchases.
  • 5Operating profit increased by 12.3% to $480.7 million, demonstrating strong revenue growth and margin expansion.
  • 6The company opened 249 new stores and remodeled or relocated 301 stores, continuing its expansion strategy.
  • 7Cash generated from operating activities increased to $404.0 million from $370.2 million in the prior year period.

Frequently Asked Questions

Dollar General reported a 7.0% increase in net sales, reaching $5.27 billion for the first quarter ended April 29, 2016. This growth was supported by a 2.2% increase in same-store sales, driven by higher customer traffic and increased average transaction amounts.

Dollar General improved its profitability by increasing its gross profit margin to 30.6% due to better initial markups and lower transportation costs. Furthermore, Selling, General, and Administrative (SG&A) expenses as a percentage of sales decreased to 21.5%, reflecting effective cost management in areas like utilities and administrative labor.

Dollar General continues to execute an aggressive growth strategy. In the first quarter of fiscal 2016, the company opened 249 new stores and remodeled or relocated 301 existing stores. They plan to open approximately 900 new stores and relocate or remodel about 875 stores for the full fiscal year 2016.

Share repurchases played a significant role in boosting earnings per share. The company repurchased approximately 2.7 million shares for $231.0 million during the quarter. This reduction in the weighted average number of diluted shares outstanding contributed to the increase in diluted earnings per share to $1.03, compared to $0.84 in the prior year period.