Dollar General Forecasts 2021 Comp Decline
Dollar General said its fourth quarter same store sales increased 12.7% thanks to larger transaction sizes and broad-based strength throughout all major categories in the company’s more than 17,000 stores.
Total fourth quarter sales for the period ended Jan. 29, increased 17.6% to $8.4 billion and full-year sales increased 21.6% to $33.7 billion compared to $27.8 billion the prior year. The gross margin rate expanded by 77 basis points to 32.5% in the fourth quarter and expanded 117 basis points to 31.8% for the full year, more than offsetting increased expenses related to COVID-19 mitigation efforts that totaled $248 million. As a result, fourth quarter profits increase 20% to $642.7 million and full year profits increased 55% to $2.7 billion.
“Our full-year results were highlighted by significant growth on both the top and bottom lines, including a net sales increase of 28.1% in our non-consumables business,” said Dollar General CEO Todd Vasos. “In addition, we completed 2,780 real estate projects, including the opening of our 17,000th store and launch of our new popshelf concept, while delivering our 31st consecutive year of same-store sales growth. We continue to operate from a position of strength, and are excited about our plans for 2021 to continue delivering value and convenience for our customers, along with long-term sustainable growth and value for our shareholders.”
The company’s plans for 2021 include continued expansion and expectations that sales growth is unlikely given comparison against 2021’s incredibly strong results. Dollar General affirmed plans to execute 2,900 real estate projects, including 1,050 new store openings, 1,750 store remodels and 100 store relocations. That compares to 1,000 new stores, 1,670 remodels and 110 relocations in 2020.
Even though the addition of new selling space will aid top line performance, Dollar General is forecasting sales to be flat or down 2% for the full year. The company maintains significant uncertainty continues to exist regarding the severity and duration of the COVID-19 pandemic, which make it difficult to predict specific outcomes. Other variables such as economic stimulus payments, economic recovery, employment levels and the COVID-19 vaccine status were cited as sources of uncertainty.
“We believe the fundamentals of the business are strong, and we are confident in the team’s ability to execute on our robust plans for 2021,” said John Garratt, Dollar General’s CFO. “We are executing well against our operating priorities and strategic initiatives, which we believe positions us well to drive long-term sustainable growth. As always, we continue to be disciplined in how we manage expenses and capital with the goal of delivering consistent, strong financial performance, while strategically investing for the long term.”
While maintaining the long term growth thesis remains intact, Dollar General took the unusual step of providing details regarding sales trends during the early stages of its first quarter. For example, it noted that same store sales from the start of its fiscal year on Jan. 30 through Feb. 26 increased 5.7%, despite a total of 8,400 lost store operating days due to closures related to extreme winter weather. However, as the company began to lap the early stage of pandemic induced pantry loading in 2020, same store sales declined 16% during the period from Feb. 27 through March 16.
Goodlettsville, Tennessee-based Dollar General operates nearly 17,000 stores in 46 states, employing approximately 140,000 associates. The company is No. 16 on The PG 100, Progressive Grocer’s 2020 list of the top food and consumables retailers in North America.