Dollar General reports Q2 results
Todd Vasos, CEO of Dollar General, expressed disappointment with the company's second quarter results, noting that while the company made important progress on its Back to Basics plan in the second quarter, despite advancing several of its operational goals and driving positive traffic growth, "we are not satisfied with our financial results, including top line results below our expectations for the quarter.”
Vasos continued, “While we believe the softer sales trends are partially attributable to a core customer who feels financially constrained, we know the importance of controlling what we can control. With the evolving retail and consumer landscape in mind, we are taking decisive action to further enhance our value and convenience offering, as well as the in-store experience for our associates and customers.”
Vasos added, “Dollar General has a long history of serving customers in a variety of macroeconomic environments, and we believe the actions we are taking will allow us to further strengthen our position and build on our Back to Basics progress, as we seek to deliver sustainable growth and long-term shareholder value.”
Dollar General’s net sales increased 4.2% to $10.2 billion in the second quarter of 2024 compared to $9.8 billion in the second quarter of 2023. The net sales increase was primarily driven by positive sales contributions from new stores and growth in same-store sales. The increase was partially offset by the impact of store closures, the retailer said.
The retailer's same-store sales increased .5% compared to the second quarter of 2023, driven by an increase in customer traffic. The increase was partially offset by a decrease in average transaction amount, the company said.
The retailer's same-store sales in the second quarter of 2024 included growth in the consumables category. The growth was partially offset by declines in each of the seasonal, home and apparel categories, Dollar General said.
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Dollar General’s gross profit as a percentage of net sales was 30% in the second quarter of 2024 compared to 31.1% in the second quarter of 2023, a decrease of 112 basis points. This gross profit rate decrease was primarily attributable to increased markdowns, increased inventory damages, a greater proportion of sales coming from the consumables category and increased shrink. These factors were partially offset by a lower LIFO provision. Dollar General said.
Dollar General's operating profit for the second quarter of 2024 decreased 20.6% to $550 million compared to $692.3 million in the second quarter of 2023.
The retailer reported net income of $374.2 million for the second quarter of 2024, a decrease of 20.2% compared to $468.8 million in the second quarter of 2023. Diluted EPS decreased 20.2% to $1.70 for the second quarter of 2024 compared to diluted EPS of $2.13 in the prior year period.
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The company is updating its financial guidance provided on May 30, 2024, primarily to reflect the softer sales trends and related gross margin impacts, which are anticipated to continue through the remainder of the 52-week fiscal year ending Jan. 31, 2025 (“fiscal year 2024”).
For fiscal year 2024, Dollar General now expects net sales growth in the range of approximately 4.7% to 5.3%, compared to its previous expectation of approximately 6% to 6.7%. DG expects same-store sales growth in the range of approximately 1% to 1.6%, compared to its previous expectation in the range of 2% to 2.7% and diluted EPS in the range of approximately $5.50 to $6.20, compared to its previous expectation of approximately $6.80 to $7.55.