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GOODLETTSVILLE, Tenn. — Dollar General on Thursday reported net sales of $8.8 billion for its fiscal year 2022 first quarter, an increase of 4.2% over the prior-year period.
The net sales increase was primarily driven by positive sales contributions from new stores, partially offset by a slight decline in same-store sales and the impact of store closures. Same-store sales decreased 0.1% for the 13 weeks ended April 29, driven by a decline in customer traffic that was partially offset by an increase in the average transaction amount. Same-store sales in the first quarter of 2022 declined in each of the seasonal, apparel, and home products categories, offset by an increase in the consumables category.
Dollar General also reported that its operating profit decreased 17.9%, to $746.2 million, and that its diluted earnings per share decreased by 14.5% to $2.41.
“We are pleased with our start to 2022, and I want to thank each of our team members for their ongoing commitment and dedication to serving our customers every day,” Dollar General CEO Todd Vasos said. “Despite ongoing headwinds due to supply chain pressures and heightened inflation, we remained focused on controlling what we can control and delivered solid financial results, which exceeded our expectations for sales and EPS for the quarter.”
“During the first quarter, we executed more than 800 real estate projects, and made significant progress advancing our key strategic initiatives to enhance the value and convenience proposition for our customers. We continue to drive strategic innovation as we further differentiate Dollar General in the discount retail channel, while delivering long-term sustainable growth and value for our shareholders.”
Dollar General reported that gross profit as a percentage of net sales was 31.3% in the first quarter of 2022 compared to 32.8% in the first quarter of 2021, a decrease of 151 basis points. This gross profit rate decrease was mainly due to a greater proportion of sales coming from the consumables category, which generally has a lower gross profit rate than other product categories; an increased LIFO provision, which was driven by higher product costs; increased transportation costs; an increase in markdowns as a percentage of sales; increased distribution costs; and an increase in inventory damages. These factors were partially offset by higher inventory markups.
The company reported net income of $552.7 million for the first quarter of 2022, a decrease of 18.5% compared to $677.7 million in the first quarter of 2021.
Despite the ongoing uncertainties arising from product cost inflation and continued pressure in the supply chain, Dollar General has updated its guidance for the full 53-week fiscal year ending February 3, 2023. The Company now expects the following:
- Net sales growth of approximately 10.0% -10.5%, including an estimated benefit of approximately two percentage points from the 53rd week; compared to its previous expectation of approximately 10%, including an estimated benefit of approximately two percentage points from the 53rd week.
- Same-store sales growth of approximately 3.0% -3.5%; compared to its previous expectation of 2.5%.
- Diluted EPS growth in the range of approximately 12% to 14%, including an estimated benefit of approximately four percentage points from the 53rd week.
- Share repurchases of approximately $2.75 billion.
- Capital expenditures, including those related to investments in the company’s strategic initiatives, in the range of $1.4 billion to $1.5 billion.
The Company is also reiterating its plans to execute 2,980 real estate projects in fiscal year 2022, including 1,110 new store openings, 1,750 remodels, and 120 store relocations.
“We are pleased with our strong start to the year,” said John Garratt, Dollar General’s chief financial officer. “As a result of our strong topline performance and current expectations for the remainder of the year, we are raising our net sales and same-store sales guidance for fiscal 2022. Looking ahead, our plans include targeted investments to further enhance the in-store experience, while driving an even greater improvement in in-stock levels and customer service. We believe these investments will position us well to build on our sales momentum as we move ahead.”
