Dollar General Expecting Less-Than-Stellar Q4

Dollar General Corp.’s high hopes for its fiscal 2022 fourth quarter and full-year earnings are unlikely to come to fruition, as the discount retailer revealed in certain preliminary financial results for its fourth quarter and fiscal year ended Feb. 3.

The company expects to report financial results for the fiscal 2022 fourth quarter and full year below the expectations provided on its conference call on Dec. 1, 2022. Despite continued market share gains in sales of both consumable and non-consumable products, same-store sales for the fourth quarter increased 5.7%, compared with the company’s previous expectation of approximately 6%-7%. Dollar General now expects diluted earnings per share for the fourth quarter in the range of $2.91-$2.96, compared with its previous expectation in the range of $3.15 - $3.30.

[Read more: “Dollar General President/CFO Plans to Retire in June”]

For the fiscal year, same-store sales increased 4.3%, compared with the company’s previous expectation of being toward the upper end of a range of 4.0%-4.5%, and Dollar General expects diluted-earnings-per-share growth in the range of approximately 4.5%-5.0%, compared with its previous expectation of approximately 7% - 8%.

The company believes that the lower-than-expected results are primarily attributable to lower-than-anticipated sales and higher-than-anticipated inventory damages, both of which were negatively affected, to varying degrees, by Winter Storm Elliott during the fourth quarter. While both November and January same-store sales results were within Dollar General’s expected guidance range for the fourth quarter, at 6.7% and 6.5%, respectively, December’s same-store sales results were lower than anticipated, at 4.5%, which the retailer attributed to the storm.

The company intends to provide its full financial results for the fiscal 2022 fourth quarter and full year on March 16. While Dollar General executives will discuss their plans and expectations for the fiscal year ending Feb. 2, 2024,  in more detail on this call, the company currently expects the following for fiscal 2023:

• Same-store sales growth in the range of 3.0%-3.5%
• Diluted-earnings-per-share growth in the range of approximately 4%-6%, including anticipated negative impacts of the following:
  • Approximately three percentage points due to higher interest expense in fiscal 2023 
  • Approximately four percentage points due to lapping the fiscal 2022 53rd week

Even though the company is expecting a less-than-stellar fourth quarter, Dollar General did experience some high points during the period. For instance, it delved deeper into the health-and-wellness business. As today’s consumers place value on both balancing their budgets and their lifestyles, the discount retailer started pilot testing mobile clinics at three locations in Tennessee to offer preventive care, chronic condition management and non-emergency urgent care.

Dollar General also celebrated the opening of its 19,000th store, in Joplin, Mo. In the release of its third-quarter earnings, the discount retailer said that it anticipates executing approximately 3,170 real estate projects in the United States for fiscal year 2023, including more than 1,000 new store openings, 2,000 remodels and 120 relocations. Until the March 16 earnings call, however, it will remain to be seen if the company is still on track with this trajectory.

Goodlettsville, Tenn.-based Dollar General operated 19,000 stores in 47 states as of Jan. 28. The company is No. 15 on The PG 100, Progressive Grocer’s 2022 list of the top food and consumables retailers in North America.