Results beat estimates
Business performance
In Q4, Dollar General’s same-store sales inched up 0.7%, helped by a rise in traffic, partly offset by a drop in average transaction amount. The company saw same-store sales growth in the consumables category, which was partly offset by declines in the remaining categories of home products, apparel and seasonal.
DG recorded net sales declines across all its categories during the fourth quarter, with the highest of 11.7% in home products. Seasonal and apparel dropped 7.3% and 7.9% respectively while consumables dipped 1.9%.
Gross profit margin dropped 138 basis points to 29.5% in Q4, mainly due to higher shrink and inventory markdowns, lower inventory mark-ups, and a larger proportion of sales coming from the low-margin consumables category.
Outlook
For the first quarter of 2024, Dollar General expects same-store sales growth of 1.5-2.0% and EPS of $1.50-1.60.
“While we anticipate the first quarter will be pressured by our lowest expected same-store-sales increase of any quarter in fiscal 2024, as well as the annualization of prior year headwinds such as retail labor and shrink, we are focused on delivering our full year plans, including anticipated strong EPS growth in the back half of the year.”– Kelly Dilts, CFO, Dollar General
For the full year of 2024, the company expects net sales to grow approx. 6.0-6.7% and same-store sales to grow 2.0-2.7%. EPS is expected to range between $6.80-7.55. DG expects to undertake around 800 new store openings, 1,500 remodels, and 85 store relocations in FY2024.