Dollar General’s Q1 Results Exceed Its Expectations

With a net sales increase of 6.1%, Dollar General Corp. reported better-than-expected financial results for its fiscal year 2024 first quarter ended May 3, 2024.

The company reached $9.9 billion net sales with the help of positive sales contributions from new stores and growth in same-store sales, partly offset by the impact of store closures. During Q1, the company opened 197 new stores, including its 20,000th store,  in Alice, Texas. It also remodeled 463 stores and relocated 21 stores. 

Same-store sales increased 2.4% compared with Q1 2023, driven by an increase in customer traffic and partly offset by a decrease in average transaction amount. The positive same-store sales included growth in the consumables category, partly offset by declines in each of the home products, seasonal and apparel categories.

Shoppers will have more consumable and non-consumable store-brand items to choose from at Dollar General stores, as SVP Jackie Li commented in an interview with Progressive Grocer: “2024 is going to be just as dynamic as 2023."

“We are pleased with our start to 2024, including top- and bottom-line results that exceeded our expectations in the first quarter,” said Todd Vasos, Dollar General’s CEO. “These results were driven by strong customer traffic growth and market share gains during the quarter, which we believe is a testament to the relevance of our unique combination of value and convenience, as well as to improved execution across our organization.”

Selling, general and administrative expenses as a percentage of net sales in Q1 were 24.7% compared with last year's 23.7%, an increase of 97 basis points. The primary expenses that were a higher percentage of net sales in the first quarter of 2024 were retail labor, depreciation and amortization, incentive compensation, and repairs and maintenance.

Operating profit dropped 26.3% to $546.1 million. The company reported net income of $363.3 million, a decrease of 29.4%. Diluted EPS also decreased, 29.5% to $1.65.

Gross profit as a percentage of net sales was 30.2% in Q1 of 2024 compared with 31.6% in Q1 of 2023, a decline of 145 basis points. This was due to increased shrink and inventory markdowns, a greater proportion of sales coming from the consumables category, and lower inventory markups. These factors were partly offset by a lower LIFO provision. 

“While it is still early in our fiscal year, we are encouraged by our first- quarter financial results,” said Kelly Dilts, Dollar General’s CFO. “Although we are experiencing shrink and sales mix headwinds that are greater than we had initially anticipated coming into the year, we are working to mitigate the impact of these challenges and are reiterating our full-year financial guidance as we remain focused on our goal of delivering consistent, strong financial performance.”

For the 52-week fiscal year ending Jan. 31, 2025, the company continues to expect net sales growth from 6.0% to 6.7% and same-store sales growth from 2.0% to 2.7%. Diluted EPS is expected between $6.80 to $7.55. The company currently anticipates an estimated negative impact to EPS of approximately 50 cents due to higher incentive compensation expense. Capital expenditures, including those related to investments in the company’s strategic initiatives, is anticipated to be in the range of $1.3 billion to $1.4 billion.

[Never miss a story – sign up for Progressive Grocer's FREE Daily newsletter]

To better optimize the planned capital expenditures for fiscal year 2024 and expand the investment in mature stores, the company is increasing the number of store remodels and reducing the number of expected new store openings, resulting in an overall net increase in the number of total expected real estate projects for the year.

Dollar General now expects to execute 2,435 real estate projects, including 730 new store openings, 1,620 remodels and 85 store relocations, which compares with its previous expectation of 2,385 real estate projects in fiscal 2024, including 800 new store openings, 1,500 remodels and 85 store relocations.

“I want to thank our entire team for their dedication to fulfilling our mission of Serving Others every day," said Vasos. "Because of their efforts, we continue to make progress executing on our Back to Basics strategy, which we believe is resonating positively with our customers in the store. Looking ahead, we continue to focus on actions designed to enhance the way we support our teams and serve our customers, while creating sustainable long-term value for our shareholders.”

The company’s board of directors declared a quarterly cash dividend of 59 cents per share on the company’s common stock, payable on or before July 23 to shareholders of record on July 9. 

As of May 3, Goodlettsville, Tenn.-based Dollar General operated 20,149 Dollar General, DG Market, DGX and pOpshelf stores across the United States, and Mi Súper Dollar General stores in Mexico. The company is No. 17 on The PG 100, Progressive Grocer’s 2024 list of the top food and consumables retailers in North America.