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Dollar General (DG) Q4 Sales & Earnings Top Estimates, Down Y/Y
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Dollar General Corporation (DG - Free Report) posted fourth-quarter fiscal 2023 results, with the top and the bottom line surpassing the Zacks Consensus Estimate. However, net sales and earnings decline year over year.
Let’s Delve Deeper
Quarterly earnings came in at $1.83 per share, beating the Zacks Consensus Estimate of $1.74 per share but plunging 38.2% from the prior-year period’s levels.
Net sales of $9,858.5 million fell 3.4% from the prior-year quarter. The decline can be attributed to one less week of sales coupled with the impact of store closures. These were somewhat offset by increased same-store sales and favorable sales from new stores. The top line came ahead of the Zacks Consensus Estimate of $9,778.9 million.
Sales fell 1.9%, 7.3%, 11.7% and 7.9% for the Consumables, Seasonal, Home Products and Apparel categories, respectively.
Dollar General’s same-store sales inched up 0.7%, owing to a rise in customer traffic, somewhat offset by a decline in the average transaction amount. Same-store sales reflected growth in the consumables category. We had expected a same-store sales decline of 0.8% in the quarter under review.
Dollar General Corporation Price, Consensus and EPS Surprise
Gross profit came in at $2,906.3 million, down from $3,148.3 million reported in the year-ago quarter. Gross margin contracted to 29.5% from 30.9% reported in the year-ago quarter. The decline in the gross margin was primarily caused by higher shrink and inventory markdowns, reduced inventory markups and increased proportion of consumable sales. Lower transportation costs and LIFO provision somewhat negated these. We had expected the gross margin to come in at 31.1% in the quarter under review. Operating profit slumped 37.9% to $579.7 million.
SG&A expenses, as a percentage of net sales, increased 189 basis points to 23.6% in the quarter. Our model suggested the metric to increase 360 bps to 25.3%.
Store Update
During fiscal 2023, Dollar General opened 987 new stores, remodeled 2,007 stores and relocated 129 stores. In fiscal 2024, the company anticipates carrying out 2,385 real estate projects, including 800 store openings, 1,500 remodels and 85 store relocations.
Image Source: Zacks Investment Research
Other Financial Details
Dollar General ended the quarter with cash and cash equivalents of $537.3 million, long-term obligations of $6,231.5 million and shareholders’ equity of $6,749.1 million.
Management incurred capital expenditures of $1.7 billion during the fiscal 2023. For the fiscal 2024, the company anticipates capital expenditures in the band of $1.3-$1.4 billion.
During the fiscal 2023, Dollar General did not repurchase shares. The company had $1.4 billion remaining under its authorization at the end of the year. It currently predicts no share repurchases for the fiscal 2024.
On Mar 13, 2024, the firm announced a quarterly dividend of 59 cents per share, payable on or before Apr 23, 2024, to shareholders of record as of Apr 9, 2024.
Outlook
For fiscal 2024, management projects net sales growth to be in the band of 6-6.7%. Same-store sales growth is likely to come in the range of 2-2.7%.
The company expects fiscal 2024 earnings per share (EPS) to be $6.80-$7.55. This view includes the adverse impact of nearly 50 cents per share owing to higher incentive compensation. Management envisions an effective tax rate in the range of 22.5-23.5% in the fiscal 2024.
For the first quarter of fiscal 2024, management anticipates same-store sales growth of 1.5-2% and EPS in the range of $1.50-$1.60.
Shares of this Zacks Rank #3 (Hold) company have gained 21.7% in the past three months compared with the industry’s growth of 13%.
The Zacks Consensus Estimate for Deckers’ current fiscal-year earnings and sales indicates growth of 38.7% and 15.7%, respectively, from fiscal 2024’s reported figures. DECK's trailing four-quarter average earnings surprise is 32.1%.
The Gap, Inc. (GPS - Free Report) is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. The company currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Gap’s current financial-year sales indicates a drop of 0.2% from the year-ago reported actuals. GPS's trailing four-quarter average earnings surprise is 180.9%.
Abercrombie & Fitch Co. (ANF - Free Report) is a specialty retailer of premium, high-quality casual apparel. The company carries a Zacks Rank #2 (Buy). ANF delivered a 5.7% earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie’s current financial-year sales and earnings suggests growth of 5.7% and 16.4%, respectively, from the year-ago reported numbers. ANF has a trailing four-quarter average earnings surprise of 715.6%.
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Dollar General (DG) Q4 Sales & Earnings Top Estimates, Down Y/Y
Dollar General Corporation (DG - Free Report) posted fourth-quarter fiscal 2023 results, with the top and the bottom line surpassing the Zacks Consensus Estimate. However, net sales and earnings decline year over year.
Let’s Delve Deeper
Quarterly earnings came in at $1.83 per share, beating the Zacks Consensus Estimate of $1.74 per share but plunging 38.2% from the prior-year period’s levels.
Net sales of $9,858.5 million fell 3.4% from the prior-year quarter. The decline can be attributed to one less week of sales coupled with the impact of store closures. These were somewhat offset by increased same-store sales and favorable sales from new stores. The top line came ahead of the Zacks Consensus Estimate of $9,778.9 million.
Sales fell 1.9%, 7.3%, 11.7% and 7.9% for the Consumables, Seasonal, Home Products and Apparel categories, respectively.
Dollar General’s same-store sales inched up 0.7%, owing to a rise in customer traffic, somewhat offset by a decline in the average transaction amount. Same-store sales reflected growth in the consumables category. We had expected a same-store sales decline of 0.8% in the quarter under review.
Dollar General Corporation Price, Consensus and EPS Surprise
Dollar General Corporation price-consensus-eps-surprise-chart | Dollar General Corporation Quote
Gross profit came in at $2,906.3 million, down from $3,148.3 million reported in the year-ago quarter. Gross margin contracted to 29.5% from 30.9% reported in the year-ago quarter. The decline in the gross margin was primarily caused by higher shrink and inventory markdowns, reduced inventory markups and increased proportion of consumable sales. Lower transportation costs and LIFO provision somewhat negated these. We had expected the gross margin to come in at 31.1% in the quarter under review. Operating profit slumped 37.9% to $579.7 million.
SG&A expenses, as a percentage of net sales, increased 189 basis points to 23.6% in the quarter. Our model suggested the metric to increase 360 bps to 25.3%.
Store Update
During fiscal 2023, Dollar General opened 987 new stores, remodeled 2,007 stores and relocated 129 stores. In fiscal 2024, the company anticipates carrying out 2,385 real estate projects, including 800 store openings, 1,500 remodels and 85 store relocations.
Image Source: Zacks Investment Research
Other Financial Details
Dollar General ended the quarter with cash and cash equivalents of $537.3 million, long-term obligations of $6,231.5 million and shareholders’ equity of $6,749.1 million.
Management incurred capital expenditures of $1.7 billion during the fiscal 2023. For the fiscal 2024, the company anticipates capital expenditures in the band of $1.3-$1.4 billion.
During the fiscal 2023, Dollar General did not repurchase shares. The company had $1.4 billion remaining under its authorization at the end of the year. It currently predicts no share repurchases for the fiscal 2024.
On Mar 13, 2024, the firm announced a quarterly dividend of 59 cents per share, payable on or before Apr 23, 2024, to shareholders of record as of Apr 9, 2024.
Outlook
For fiscal 2024, management projects net sales growth to be in the band of 6-6.7%. Same-store sales growth is likely to come in the range of 2-2.7%.
The company expects fiscal 2024 earnings per share (EPS) to be $6.80-$7.55. This view includes the adverse impact of nearly 50 cents per share owing to higher incentive compensation. Management envisions an effective tax rate in the range of 22.5-23.5% in the fiscal 2024.
For the first quarter of fiscal 2024, management anticipates same-store sales growth of 1.5-2% and EPS in the range of $1.50-$1.60.
Shares of this Zacks Rank #3 (Hold) company have gained 21.7% in the past three months compared with the industry’s growth of 13%.
Some Solid Picks
Deckers Outdoor Corporation (DECK - Free Report) is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Deckers’ current fiscal-year earnings and sales indicates growth of 38.7% and 15.7%, respectively, from fiscal 2024’s reported figures. DECK's trailing four-quarter average earnings surprise is 32.1%.
The Gap, Inc. (GPS - Free Report) is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. The company currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Gap’s current financial-year sales indicates a drop of 0.2% from the year-ago reported actuals. GPS's trailing four-quarter average earnings surprise is 180.9%.
Abercrombie & Fitch Co. (ANF - Free Report) is a specialty retailer of premium, high-quality casual apparel. The company carries a Zacks Rank #2 (Buy). ANF delivered a 5.7% earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie’s current financial-year sales and earnings suggests growth of 5.7% and 16.4%, respectively, from the year-ago reported numbers. ANF has a trailing four-quarter average earnings surprise of 715.6%.