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GOODLETTSVILLE, Tenn. — Dollar General Corp. Dollar General reported a net sales gain of 2.8% for the fourth quarter, and said on Thursday that it expects sales to increase by 10% in the current fiscal year.
“We are pleased with our fourth quarter and fiscal year results, and I want to thank our associates for their unwavering commitment to meeting the critical needs of our customers during the pandemic,” said Dollar General CEO Todd Vasos. “Despite a more challenging than expected operating environment, our teams remained focused on executing our operating priorities and advancing our strategic initiatives, which we believe position us well for solid sales and profit growth in 2022 and beyond.”
“For the full year, we are pleased with our net sales increase of 1.4%, which was on the high end of our guidance, and on top of a robust 21.6% increase in fiscal 2020. In addition, during the year, we completed the initial rollout of DG Fresh, executed more than 2,900 real estate projects, including the opening of our 18,000th store and 50 standalone pOpshelf locations, and launched new initiatives focused on health and international expansion.”
“Overall, we are excited about our plans for 2022, as we look to further differentiate Dollar General from the rest of the retail landscape, while delivering long-term sustainable growth and value for our shareholders.”
Net sales increased 2.8% to $8.7 billion in the fourth quarter of 2021 compared to $8.4 billion in the fourth quarter of 2020. The net sales increase was primarily driven by positive sales contributions from new stores, partially offset by the decline in same-store sales and the impact of store closures. Same-store sales decreased 1.4% compared to the fourth quarter of 2020, driven by a decline in customer traffic, partially offset by an increase in the average transaction amount. Same-store sales in the fourth quarter of 2021 declined in each of the apparel, consumables, seasonal, and home products categories.
Gross profit as a percentage of net sales was 31.2% in the fourth quarter of 2021 compared to 32.5% in the fourth quarter of 2020, a decrease of 131 basis points. This gross profit rate decrease was primarily attributable to an increased LIFO provision, which was driven by higher product costs; increased transportation and distribution costs; and a greater proportion of sales coming from the consumables category, which generally has a lower gross profit rate than other product categories. These factors were partially offset by a reduction in markdowns as a percentage of net sales and higher inventory markups.
Selling, general and administrative expenses (“SG&A”) as a percentage of net sales were 22.0% in the fourth quarter of 2021 compared to 22.2% in the fourth quarter of 2020, a decrease of 16 basis points. The decrease was primarily driven by lower incremental costs related to COVID-19, lower hurricane-related expenses, and a reduction in incentive compensation. These items were partially offset by expenses that were higher as a percentage of sales this quarter, including retail labor, store occupancy costs, and depreciation and amortization.
The company reported net income of $597.4 million for the fourth quarter of 2021, a decrease of 7.0% compared to $642.7 million in the fourth quarter of 2020. Diluted EPS decreased 1.9% to $2.57 for the fourth quarter of 2021 compared to diluted EPS of $2.62 in the fourth quarter of 2020.
Fiscal year 2021 net sales increased 1.4% to $34.2 billion compared to $33.7 billion in fiscal year 2020. The net sales increase was primarily driven by positive sales contributions from new stores, partially offset by a decline in same-store sales and the impact of store closures. Same-store sales decreased 2.8% compared to fiscal year 2020, driven by a decline in customer traffic, partially offset by an increase in average transaction amount. Same-store sales in the 2021 period declined in each of the consumables, apparel, seasonal, and home products categories.
The company reported net income of $2.4 billion for fiscal year 2021, a decrease of 9.6% compared to $2.7 billion in fiscal year 2020. Diluted EPS decreased 4.2% to $10.17 for fiscal year 2021 compared to diluted EPS of $10.62 in fiscal year 2020.
Looking ahead, Dollar General notes that retailers face uncertainty related to how geopolitical conflict and the ongoing COVID-19 pandemic will affect the economy.
Despite this uncertainty, the company’s current guidance for the 53-week fiscal year ending February 3 calls for:
- Net sales growth of approximately 10%, including an estimated benefit of approximately two percentage points from the 53rd week.
- Same-store sales growth of approximately 2.5%.
- Diluted earnings per share growth in the range of approximately 12% to 14%, including an estimated benefit of approximately four percentage points from the 53rd week. this Diluted EPS guidance assumes an effective tax rate in the range of 22.5% to 23.0%.
- 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.
Dollar General is also reiterating its plans to execute 2,980 real estate projects in the current fiscal year, including 1,110 new store openings, 1,750 remodels, and 120 store relocations.
“We feel very good about the underlying strength of the business, as reflected in our full-year outlook for fiscal 2022,” said John Garratt, Dollar General’s chief financial officer. “While we anticipate a challenging first quarter due to elevated cost pressures, ongoing supply chain disruptions, and the prior year sales and gross margin comparison, both of which were positively impacted by stimulus payments, we are confident in our full year plan, including our outlook for sales and EPS growth.”
