Dollar General is smokin’ in the second quarter
GOODLETTSVILLE, Tenn. — Dollar General reported record sales, operating profit and net income for its second quarter ended Aug. 2, driven, in part, by the company’s newly introduced tobacco products and strong sales of perishables and candy and snacks.
The company’s net income increased 15% to $245 million in the quarter, from $214 million in the year-ago quarter, and earnings per diluted share of $0.75 in the quarter increased 17% over EPS of $0.64 in the year-ago quarter.
Net sales increased 11.3% to $4.39 billion in the quarter, from $3.95 billion in the year-ago quarter. Same-store sales increased 5%, with increases in both customer traffic and average transaction value. Consumables sales continued to increase at a higher rate than non-consumables in the 2013 quarter. Same-store sales growth was solid in seasonal and apparel, and the trend in home products improved from this year’s first quarter results.
“Dollar General delivered another solid quarter. Our same-store sales growth for the second quarter of 2013 accelerated to 5%. We are very pleased with the increase in customer traffic in our stores. We continue to grow our market share and believe that our second quarter results position us well to deliver our financial outlook for the year,” said Rick Dreiling, Dollar General’s chairman and CEO.
Gross profit increased by 9% and, as a percentage of sales, decreased by 65 basis points to 31.3% in the 2013 second quarter. The majority of the gross profit rate decrease in the quarter as compared to the year-ago quarterwas due to an increase in the mix of consumables and increased sales of lower margin consumables, including the company’s newly introduced tobacco products and expanded perishables offerings, all of which contributed to lower initial inventory markups.
The company previously estimated opening 635 new stores and has adjusted that number to 650. It also plans to remodel or relocate approximately 550 stores. Square footage is again expected to increase by approximately 7%. Dollar General anticipates that its new Pennsylvania distribution center will be fully operational in the first quarter of fiscal 2014.