Dollar General Corporation reported record sales, operating profit and net income for its fiscal 2012 fourth quarter (13 weeks) and full year (52 weeks) ended February 1, 2013.
Highlights of the results
-Fourth Quarter Same-Store Sales Increased 3.0%; Full Year Same-Store Sales Increased 4.7%
-Fourth Quarter EPS of $0.97, including $0.02 per share impact of retroactive income tax credits
-Full Year Adjusted EPS of $2.91; Full Year Reported EPS of $2.85
-Company Increases Share Repurchase Authorization by $500 Million
“We remain committed to delivering long-term value for our shareholders through increased earnings and return of cash through ongoing share repurchases.”
“Dollar General had yet another outstanding year in 2012 including exceptionally strong fourth quarter results. We grew our market share and invested strategically to continue to win with our customers. These results demonstrate the strength of our business strategy, and we believe we are very well-positioned for future growth,” said Rick Dreiling, chairman and chief executive officer.
“For 2013, we are forecasting another year of strong growth including a total sales increase of 10 to 12 percent, same-store sales growth of 4 to 6 percent and adjusted EPS of $3.15 to $3.30,” Mr. Dreiling continued. “We remain committed to delivering long-term value for our shareholders through increased earnings and return of cash through ongoing share repurchases.”
Fiscal Fourth Quarter 2012 Highlights
Net sales increased 0.5 percent to $4.21 billion in the 2012 fourth quarter compared to $4.19 billion in the 2011 fourth quarter. Excluding sales for the week ending February 3, 2012 (“the 2011 53rd week”) of $289 million, net sales increased 8.0 percent. Same-store sales, based on the comparable 13-week periods ended February 1, 2013 and February 3, 2012, increased 3.0 percent, resulting from increases in both customer traffic and average transaction amount. Same-store sales increases were primarily driven by consumables.
The Company’s gross profit, as a percentage of sales, was 32.5 percent in the 2012 fourth quarter compared to 32.2 percent in the 2011 quarter, an increase of 34 basis points. Factors contributing to the improvement included a significant reduction in the adjustment to the Company’s LIFO reserve in addition to improved transportation efficiencies and higher markups, partially offset by an increase in the mix of consumables, which generally have lower markups than non-consumables, and higher markdowns. Cost of goods sold included charges to increase the Company’s LIFO reserve of $0.2 million in the 2012 fourth quarter compared to $22.3 million in the 2011 fourth quarter.
Full Year 2012 Financial Results
Full year 2012 net sales increased 8.2 percent to $16.02 billion compared to net sales of $14.81 billion in 2011. Excluding the impact of the 2011 53rd week, net sales increased 10.4 percent. Same-store sales, based on the comparable 52-week periods ended February 1, 2013 and February 3, 2012, increased 4.7 percent, including increases in both customer traffic and average transaction amount, resulting from the refinement of the Company’s merchandise offerings, improvements in category management processes and store standards, and increased utilization of store square footage.
The increase in sales of consumables outpaced non-consumables, with sales of snacks, candy, beverages and perishables contributing the majority of the increase throughout the year.
The Company’s gross profit rate was 31.7 percent of sales in 2012 and 2011. Factors favorably impacting the gross profit rate included a significantly lower LIFO provision, higher inventory markups, and improved transportation efficiencies due in part to a decrease in average miles per delivery enabled by the Company's new distribution centers and other logistics initiatives.
These positive factors were offset by higher markdowns, a reduction in price increases and a modest increase in the inventory shrinkage rate compared to 2011. In addition, consumables, which generally have lower markups than non-consumables, represented a greater percentage of sales in 2012 than in 2011. Primarily as the result of lower inflation on commodities in 2012, the LIFO provision decreased to $1.4 million in 2012 compared to $47.7 million in 2011.
