Dollar General Corporation Reports Q2 FY2024 Financial Results
Intellectia.AI Updated: 2024-08-29
Dollar General Corporation Reports Q2 FY2024 Financial Results
Dollar General Corporation (NYSE: DG) today announced its financial results for the fiscal 2024 second quarter, which ended on August 2, 2024.
Key Financial Metrics
| Metric | Q2 FY2024 | Q2 FY2023 | YoY Change | Consensus Estimate |
|---|---|---|---|---|
| Total Revenue | $10.2 Billion | $9.8 Billion | +4.2% | $10.37 Billion |
| Same-Store Sales Growth | +0.5% | - | N/A | - |
| Operating Profit | $550 Million | $692.3 Million | -20.6% | - |
| EPS | $1.70 | $2.13 | -20.2% | $1.79 |
| Net Income | $374.2 Million | $468.8 Million | -20.2% | - |
Financial Interpretation: Dollar General fell short of analyst expectations for both revenue and EPS, driven by lower-than-anticipated top-line results and a decline in operating profit. Despite positive traffic growth and improvements in operational goals, the company's financial performance reflects a challenging retail environment.
Segment Revenue Performance
| Segment | Q2 FY2024 | Q2 FY2023 | YoY Change | Previous Guidance |
|---|---|---|---|---|
| Net Sales | $10.2 Billion | $9.8 Billion | +4.2% | 6.0% - 6.7% |
| Same-Store Sales | +0.5% | - | N/A | 2.0% - 2.7% |
Segment Interpretation: The modest increase in same-store sales (+0.5%) was driven by growth in the consumables category, offset by declines in seasonal, home, and apparel categories. The net sales growth of 4.2% fell short of the previous guidance, indicating softer sales trends.
Key Developments and Operational Highlights
- Same-Store Sales: Increased by 0.5% primarily driven by higher customer traffic.
- Gross Profit Rate: Decreased by 112 basis points to 30.0%, impacted by increased markdowns and a greater proportion of sales from consumables.
- SG&A Expenses: Increased by 57 basis points to 24.6%.
- Operating Profit: Decreased by 20.6% to $550 million.
- Net Interest Expense: Decreased by 19.2% to $68.1 million.
- Tax Rate: Effective income tax rate of 22.3%, slightly lower than 22.9% in Q2 2023.
Comments from Company Officers
CEO Todd Vasos stated, "We made important progress on our Back to Basics plan in the second quarter. However, despite advancing several of our operational goals and driving positive traffic growth, we are not satisfied with our financial results." He emphasized the need to enhance the company's value proposition and in-store experience, citing the financial constraints on core customers.
Share Repurchases and Dividend
- Dividend: The Board of Directors declared a quarterly cash dividend of $0.59 per share, payable on October 22, 2024.
- Share Repurchase Program: No shares were repurchased in Q2 2024, with $1.4 billion remaining under authorization.
Forward Guidance
Dollar General updated its fiscal year 2024 outlook: - Net Sales Growth: Revised to 4.7%-5.3%. - Same-Store Sales Growth: Revised to 1.0%-1.6%. - Diluted EPS: Revised to $5.50-$6.20. - Capital Expenditures: Estimated at $1.3 billion to $1.4 billion. - Real Estate Projects: Plans for 2,435 projects including 730 new store openings.
Stock Price Movement
Following the earnings release, Dollar General's stock experienced a sharp decline, dropping by 18.76%.
Conclusion
Dollar General's Q2 FY2024 financial results reflect a challenging retail environment impacted by softer sales trends and increased operational costs. The company remains focused on its Back to Basics plan to drive long-term growth and shareholder value, despite current hurdles.
The report has been organized into a clear and concise format suitable for investors.
