Dollar General Q3 Earnings Top Estimates, Tightens FY21 Outlook; To Accelerate pOpshelf Store Concept

Dollar General Corp DG reported third-quarter FY21 sales growth of 3.9% year-on-year, to $8.52 billion, beating the analyst consensus of $8.49 billion. EPS of $2.08 beat the analyst consensus of $2.01.

• Same-store sales decreased 0.6% versus last year. Same-store sales increased 11.6% on a two-year stack basis.
• The net sales increase was primarily driven by positive sales contributions from new stores, partially offset by a slight decline in same-store sales and the impact of store closures.
• The gross profit margin for the quarter decreased 57 basis points Y/Y to 30.8%. The operating margin was 7.8%, and operating income for the quarter fell 13.9% to $665.6 million.
• The company held $488.7 million in cash and equivalents as of October 29, 2021. Net cash provided by operating activities for the nine months totaled $2.2 billion.
• On December 1, 2021, the company’s board increased the authorization under the share repurchase program by $2.0 billion. The total remaining authorization for future repurchases was $619 million at Q3 end.
• On November 30, 2021, the company’s board declared a quarterly cash dividend of $0.42 per share on its common stock, payable on or before January 18, 2022, to shareholders of record on January 4, 2022.
• Dollar General plans to accelerate the pace of new store openings, targeting a total of approximately 1,000 pOpshelf locations by fiscal year-end 2025.
• The company reiterated its plans to execute 2,900 real estate projects in FY21, including 1,050 new store openings, 1,750 store remodels, and 100 store relocations.
• Outlook: Dollar General sees FY21 sales growth of 1.0% - 1.5% (prior 0.5% - 1.5% growth). Same-store sales decline of 3.0% - 2.5% (prior decline of 3.5%-2.5%).
• The company expects FY21 EPS of $9.90 - $10.20 (prior $9.60 - $10.20) versus the consensus of $10.20.
• Price Action: DG shares are trading lower by 3.45% at $215.11 in premarket on the last check Thursday.