Dollar General Q2 sales beat expectations

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GOODLETTSVILLE, Tenn. — Dollar General Corp. reported higher-than-expected sales and earnings for the second quarter, and boosted its projections for the year despite an expected increase in transportation and distribution costs and uncertainty caused by the Delta variant.

Net sales decreased 0.4% to $8.7 billion in the second quarter of 2021, but still beat analysts’ expectations. The net sales decrease was primarily driven by a decline in same-store sales, as well as the impact of store closures, partially offset by positive sales contributions from new stores.

Same-store sales decreased 4.7% compared to the second quarter of 2020, driven by a decline in customer traffic, partially offset by an increase in the average transaction amount. Same-store sales in the second quarter of 2021 included a decline in each of the consumables, seasonal, apparel, and home products categories.  Same-store sales were up 14.1% on a two-year stack basis.

“We are pleased with our second-quarter results, and remain grateful to our associates for their dedication to fulfilling our mission of Serving Others,” Dollar General CEO Todd Vasos said. “Despite what remains a challenging operating environment, including additional uncertainties brought on by the Delta variant and pressures on the global supply chain, our team has continued to successfully adapt and deliver for our customers.”

The Company reported net income of $637.0 million for the second quarter of 2021, a decrease of 19.1% compared to $787.6 million in the second quarter of 2020. Diluted earnings per share decreased 13.8% to $2.69 for the second quarter of 2021 compared to diluted EPS of $3.12 in the second quarter of 2020. Analysts had predicted earnings of $2.59 per share.

“During the quarter, we made significant progress on many key initiatives, including the completion of our initial rollout of DG Fresh and the opening of our first pOpshelf store-within-a-store concept,” Vasos said. “In addition, we executed more than 750 real estate projects, including new store openings in our pOpshelf concept and larger footprint Dollar General formats. We remain focused on delivering value and convenience for our customers, while driving long-term sustainable growth and value for our shareholders. We feel very good about the underlying strength of the business, and we are excited about our plans for the second half of fiscal 2021.”

For fiscal year 2021, the Dollar General said it now expects:

  • Net sales growth of 0.5% to 1.5%; compared to its previous expectation in the range of a 1% decline to an increase of 1%;
    Same-store sales decline of 3.5% to 2.5%, which reflects growth of approximately 13% to 14% on a two-year stack basis3; compared to its previous expectation of a decline of 5% to 3%;
  • Diluted EPS in the range of $9.60 to $10.20, which reflects a compound annual growth rate in the range of 20% to 24% (or in the range of approximately 19% to 23% compared to 2019 Adjusted diluted EPS) over a two-year period4; compared to its previous expectation in the range of $9.50 to $10.20This Diluted EPS guidance assumes an effective tax rate in the range of approximately 22% to 22.5%, compared to the previous assumption of 22% to 23%
  • Share repurchases of approximately $2.4 billion; compared to its previous expectation of approximately $2.2 billion
  • Capital expenditures, including those related to investments in the Company’s strategic initiatives, in the range of $1.1 billion to $1.2 billion, compared to its previous expected range of $1.05 billion to $1.15 billion.
  • The company is reiterating its plans to execute 2,900 real estate projects in fiscal year 2021, including 1,050 new store openings, 1,750 store remodels, and 100 store relocations.

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