GOODLETTSVILLE, Tenn. — Dollar General Corp. reported strong sales for the fourth quarter and fiscal year (53 weeks) ended February 3, although store traffic was down and sales came in below expectations.

Fourth quarter net sales increased 17.9%, and fiscal year net sales increased 10.6%. Same-store sales in the fourth quarter increased 5.7%, falling short of analysts’ expectations of a 6% gain, and fiscal year same-store sales increased 4.3%. The company reported an operating profit of $933.2 million for the fourth quarter, up 17.1% from last year’s quarter. Dollar General’s operating profit for the fiscal year increased 3.3% to $3.3 billion.

“Our fourth-quarter sales results were strong, although below our expectations, and we are pleased with continued market share gains in both consumables and non-consumables, as well as continued growth with new and existing customers,” said Jeff Owen, Dollar General’s chief executive officer. “We want to thank our more than 170,000 associates for their commitment to serving our customers, communities, and each other in this challenging economic and operating environment.

“We made significant progress advancing our operating priorities and strategic initiatives in fiscal 2022, including executing nearly 3,000 real estate projects, completing the rollout of our non-consumables initiative, nearly tripling our pOpshelf store count, more-than-doubling the size of our private tractor fleet, and opening three new distribution centers. As a result, we believe we are well-positioned to continue serving our customers with our unique combination of value and convenience in the communities we call home.”

“Looking ahead, we are excited about our plans for fiscal 2023, which include continued investment in our strategic initiatives and an incremental investment of approximately $100 million in our stores, primarily in incremental labor hours, as we look to build on our sales momentum and capture additional market share by further enhancing store standards and the in-store experience. Building on the investments we made in 2022, and the substantial progress we have made in our supply chain, we believe this incremental investment will yield strong returns as we continue creating long-term sustainable growth and value for our shareholders.”

Net sales increased 17.9% to $10.2 billion in the fourth quarter of 2022 compared to $8.7 billion in the fourth quarter of 2021. Net sales for the 53rd week of fiscal 2022 were $678.1 million. The net sales increase was primarily driven by positive sales contributions from new stores and growth in same-store sales, partially offset by the impact of store closures. Same-store sales increased 5.7% compared to the fourth quarter of 2021, driven by an increase in average transaction amount, partially offset by a modest decrease in customer traffic. Same-store sales in the fourth quarter of 2022 included growth in the consumables category, partially offset by declines in each of the apparel, home, and seasonal products categories.

Gross profit as a percentage of net sales was 30.9% in the fourth quarter of 2022 compared to 31.2% in the fourth quarter of 2021, a decrease of 35 basis points. This gross profit rate decrease was primarily attributable to an increased LIFO provision, which was driven by higher product costs; a greater proportion of sales coming from the consumables category, which generally has a lower gross profit rate than other product categories; and increases in inventory shrink, damages and markdowns; partially offset by higher inventory markups and a reduction in transportation costs.

Selling, general and administrative expenses (“SG&A”) as a percentage of net sales were 21.7% in the fourth quarter of 2022 compared to 22.0% in the fourth quarter of 2021, a decrease of 29 basis points. The primary expenses that were a lower percentage of net sales in the current year period were retail occupancy costs, incentive compensation, and retail labor; partially offset by certain expenses that were a greater percentage of net sales in the current year period, primarily utilities.

Looking ahead, Dollar General is projecting net sales growth in the range of approximately 5.5% to 6% in fiscal 2023, including an anticipated negative impact of approximately two percentage points due to lapping the fiscal 2022 53rd week. Same-store sales growth is expected to be in the range of 3.0% to 3.5%, diluted earnings per share growth is expected to be in the range of approximately 4% to 6%.

The company is planning capital expenditures in the range of $1.8 billion to $1.9 billion for the coming year, which will include funding for 1,050 new store openings, 2,000 remodels, and 120 store relocations.

“Our fiscal 2023 full-year outlook reflects our confidence in the business, even in a potentially challenging economic and operating environment,” said John Garratt, Dollar General’s president and chief financial officer. “While we anticipate the first half of fiscal 2023 to be negatively impacted by ongoing sales mix pressures, higher shrink levels, increased damages, and higher interest expense, we are confident in our full-year plans.”