Dollar General's gains in FY22 included growth with new and existing customers.
Although its fourth quarter sales results came in below expectations, Dollar General Corp. is reporting gains in both net and same-store sales, as well as growth in market share and new customers. The company shared preliminary results last month for its Q4 and full fiscal year 2022, both ended Feb. 3, explaining at the time that its lackluster results are primarily attributable to lower-than-anticipated sales and higher-than-anticipated inventory damages, both of which were negatively affected by Winter Storm Elliott.
For Q4, Dollar General’s net sales increased 17.9% to $10.2 billion, and same-store sales increased 5.7% compared to Q4 2021, driven by an increase in average transaction amount but partially offset by a modest decrease in customer traffic. Operating profit increased 17.1% to $933.2 million and diluted EPS increased 15.2%.
“Our fourth quarter sales results were strong, although below our expectations, and we are pleased with continued market share gains in both consumables and non-consumables, as well as continued growth with new and existing customers,” said CEO Jeff Owen. “We want to thank our more than 170,000 associates for their commitment to serving our customers, communities, and each other in this challenging economic and operating environment.”
Dollar General’s FY22 year-over-year net sales increased 10.6% to $37.8 billion, primarily driven by sales from new stores and growth in same-store sales, but partially offset by the impact of store closures. Same-store sales increased 4.3%, while gross profit as a percentage of net sales was down 37 basis points year-over-year to 31.2%. Operating profit for FY22 increased 3.3% to $3.3 billion compared to $3.2 billion in FY21.
“We made significant progress advancing our operating priorities and strategic initiatives in fiscal 2022, including executing nearly 3,000 real estate projects, completing the rollout of our non-consumables initiative, nearly tripling our pOpshelf store count, more-than-doubling the size of our private tractor fleet, and opening three new distribution centers,” Owen said. “As a result, we believe we are well-positioned to continue serving our customers with our unique combination of value and convenience in the communities we call home.”
Looking forward to FY23, Dollar General is reiterating its previously stated sales goals of net sales growth of approximately 5.5% to 6% and same-store sales growth in the range of 3.0% to 3.5%. Diluted EPS growth in the range of approximately 4% to 6% is also expected. The company still plans to execute 3,170 real estate projects in FY23, including 1,050 new store openings, 2,000 remodels and 120 store relocations.
According to Owen, FY23 will also bring continued investment in the company’s strategic initiatives and an incremental investment of approximately $100 million in its stores, primarily in incremental labor hours. “Building on the investments we made in 2022, and the substantial progress we have made in our supply chain, we believe this incremental investment will yield strong returns as we continue creating long-term sustainable growth and value for our shareholders,” he said.
Earlier this month, Dollar General increased its investment in private brands, having reformulated and rebranded its dog and cat food line, Nature’s Menu. Additionally, the discount retailer recently started pilot testing mobile clinics at three locations in Tennessee to offer preventive care, chronic condition management and non-emergency urgent care.