Post Earnings Coverage as Dollar General’s Quarterly Sales Jumped 13.7%; EPS Climbed 15%

Upcoming AWS Coverage on PriceSmart Post-Earnings Results

LONDON, UK / ACCESSWIRE / March 29, 2017 / Active Wall St. announces its post-earnings coverage on Dollar General Corp. (NYSE: DG). The Company reported its fourth quarter and fiscal 2016 financial results on March 16, 2017. The US discount retailer surpassed top- and bottom-line expectations. Register with us now for your free membership at:

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One of Dollar General’s competitors within the Discount, Variety Stores space, PriceSmart, Inc. (NASDAQ: PSMT), announced on March 07, 2017, that it plans to release Q2 FY17 financial results on Thursday, April 06, 2017, after the market closes. PriceSmart management plans to host a conference call at 12:00 p.m. ET on Friday, April 7, 2017, to discuss the financial results. AWS will be initiating a research report on PriceSmart in the coming days.

Today, AWS is promoting its earnings coverage on DG; touching on PSMT. Get our free coverage by signing up to:

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Earnings Reviewed

For its fourteen week ended February 03, 2017, Dollar General’s net sales increased 13.7% to $6.01 billion compared to $5.3 billion in Q4 FY15. The Company’s revenue numbers came in above analysts’ consensus of $5.97 billion.

Dollar General’s same-store sales increased 1.0% on a y-o-y basis primarily due to an increase in average transaction amount, which was partially offset by a slight decline in traffic. Same-store sales were driven by positive results in the consumables and home products categories, partially offset by negative results in the seasonal and apparel categories. The net sales increase was positively affected by sales from new stores, modestly offset by sales from closed stores.

Dollar General’s gross profit, as a percentage of sales, was 31.6% in Q4 FY16 compared to 31.8% in Q4 FY15, a decrease of 19 basis points. The decline was primarily attributable to higher markdowns, driven mainly by promotional activities and inventory clearance, and a greater proportion of sales of consumables. Partially offsetting these items were higher initial inventory mark-ups. Selling, general, and administrative expenses (“SG&A”) were $1.22 billion in the Q4 FY16 compared to $1.07 billion in Q4 FY15, an increase of 6 basis points as a percentage of sales.

The Company’s net income and diluted EPS for the Q4 FY16 were $414 million and $1.49, respectively, compared to net income and diluted EPS of $376 million and $1.30, respectively, in Q4 FY15. Dollar General’s earnings numbers surpassed market estimates of $1.41 per share.

Full Year 2016 Financial Results

Dollar General’s full year 2016 net sales increased 7.9% to $22.0 billion compared to net sales of $20.4 billion in FY15. Same-store sales increased 0.9%, primarily due to an increase in average transaction amount accompanied by traffic that was essentially unchanged as compared to the prior year.

The Company’s gross profit rate was 30.8% of sales in FY16 compared to 31.0% in FY15, a decrease of 11 basis points. Full year SG&A was 21.5% of sales compared to 21.4% in FY15, an increase of 3 basis points.

For FY16, Dollar General’s net income was $1.25 billion, or diluted EPS of $4.43, compared to net income of $1.17 billion, or diluted EPS of $3.95, for FY15, with diluted EPS growing 12.2%.

Merchandise Inventories

As of February 03, 2017, Dollar General’s total merchandise inventories, at cost, were $3.26 billion compared to $3.07 billion as of January 29, 2016, a decrease of approximately 0.7% on a per store basis.

Capital Expenditures

Dollar General recorded that total additions to property and equipment during FY16 were $560 million, including approximately $201 million for distribution and transportation related projects, $168 million for improvements, upgrades, remodels and relocations of existing stores; $120 million for new leased stores, primarily for leasehold improvements, $38 million for stores purchased or built by the Company and $26 million for information systems upgrades and technology-related projects. During FY16, Dollar General opened 900 new stores and remodelled or relocated 906 stores.

Share Repurchases

Dollar General repurchased $990 million, or 12.4 million shares, under its share repurchase program in FY16, at an average price of $80.17 per share. Since December 2011 through the end of FY16, the Company has repurchased 74.4 million shares of its common stock at a total cost of $4.6 billion, at an average price of $61.41 per share. The total remaining authorization for future repurchases was approximately $930 million at the end of FY16.

Dividend

On March 15, 2017, Dollar General’s Board of Directors approved an increase of 4% its quarterly cash dividend to shareholders. The first quarter dividend of $0.26 per share will be payable on April 25, 2017, to shareholders of record of the Company’s common stock on April 11, 2017.

Fiscal 2017 Guidance

For the 52-week fiscal year ending February 2, 2018 (“FY17”), Dollar General is forecasting net sales to increase 4 to 6% with same-store sales growth to be slightly positive to up 2% diluted EPS to be in the range of $4.25 to $4.50.

Share repurchases for FY17 are expected to be approximately $450 million. The Company plans to open approximately 1,000 new stores and relocate or remodel 900 stores in FY17. Capital expenditures for FY17 are expected to be in the range of $650 million to $700 million.

Stock Performance

At the close of trading session on Tuesday, March 28, 2017, Dollar General’s stock price slightly fell 0.61% to end the day at $68.55. A total volume of 2.35 million shares were exchanged during the session. The Company’s shares are trading at a PE ratio of 15.44 and have a dividend yield of 1.52%. Moreover, he stock currently has a market cap of $18.93 billion.

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