Dollar General Q4 Earnings Beat Estimates, Sales Rise 4.5% Y/Y

Core Insights - Dollar General Corporation (DG) reported fourth-quarter fiscal 2024 results with both net sales and earnings surpassing the Zacks Consensus Estimate, although earnings decreased compared to the previous year [1][4]. Financial Performance - Quarterly adjusted earnings were $1.68 per share, exceeding the Zacks Consensus Estimate of$1.50, but down 8.2% from $1.83 in the prior-year period. GAAP earnings fell 52.5$0.87 per share, impacted by store closures and impairment charges [4]. - Net sales reached $10,304.5 million, a 4.5$10,259 million, driven by new store openings and same-store sales growth, despite some offset from store closures [5]. - Same-store sales grew 1.2% year over year, with a 2.3% increase in average transaction amount and a 1.1% decrease in customer traffic. The consumables category led the growth, while home, seasonal, and apparel categories saw declines [6]. Margin and Expense Analysis - Gross margin contracted by 8 basis points to 29.4%, attributed to higher markdowns, increased inventory damages, and distribution costs, partially offset by higher inventory markups and lower shrinkage [8]. - Selling, general and administrative expenses as a percentage of net sales increased by 294 basis points to 26.5%, primarily due to $214 million in impairment charges and higher costs in various operational areas [9]. - Operating profit declined 49.2$294.2 million, reflecting significant charges related to store portfolio optimization, with the operating margin contracting 300 basis points to 2.9% [10]. Strategic Initiatives - Dollar General opened 725 new stores, remodeled 1,621 locations, and relocated 85 stores during fiscal 2024. Plans for fiscal 2025 include 4,885 real estate projects, with 575 new stores in the U.S. and up to 15 in Mexico, alongside extensive remodeling efforts [12]. - The company aims to solidify its role in rural communities through strategic store growth and improvements to its mature store base, laying a foundation for sustainable long-term growth and shareholder value [3]. Future Outlook - For fiscal 2025, Dollar General anticipates net sales growth between 3.4% and 4.4%, with same-store sales growth projected between 1.2% and 2.2%. Earnings are expected to be in the range of $5.10 to$5.80 per share [15].