Dollar General Corporation
) first-quarter fiscal 2014 earnings came in at 72 cents a share
that missed the Zacks Consensus Estimate by a penny but rose 1.4%
from 71 cents in the year-ago quarter on the back of growth across
the Consumables category.
Net sales increased 6.8% to $4,522.1 million but fell short of
the Zacks Consensus Estimate of $4,570 million. Unfavorable weather
condition, tough competition and cautious consumer spending
environment did weigh upon the company's performance.
Sales in the Consumables category jumped 7.8% to $3,445.5
million; the Seasonal category witnessed a 2.3% rise in sales to
$541.4 million, while Home products sales increased 6.7% to $283.6
million. Sales in the Apparel category grew 3.2% to $251.6
Higher traffic and average transaction count led to 1.5% growth
in comparable-store sales. Sales of the consumables category
continue to improve, primarily buoyed by the sturdy sales of
tobacco products, perishables and candy and snacks.
Gross profit increased 4.8% to $1,357.7 million, while gross
margin contracted 57 basis points to 30% due to higher sales of low
margin products like consumables. Moreover, higher markdowns also
Operating profit declined 3.9% to $379.7 million, whereas
operating margin shriveled about 90 basis points to 8.4%.
Other Financial Details
The company ended the quarter with cash and cash equivalents of
$166.3 million, long-term obligations of $3,006.4 million and
shareholders' equity of $4,832.2 million.
The company lowered its interest expense to $22.3 million from
$24.5 million in the year- ago quarter. The company had incurred
$84 million in capital expenditures during the quarter. Management
projects capital expenditures in the range of $450 million to $500
Dollar General bought back 14.1 million shares for $800 million
during the quarter. Since the commencement of the share repurchase
program in Dec 2011, the company has bought back 44.5 million
shares aggregating $2.3 billion. The company still has $223 million
remaining under its current share repurchase authorization.
Dollar General opened 214 new outlets and closed 8 stores during
the quarter, thereby bringing the total store count to 11,338.
During fiscal 2014, the company plans to open about 700 new stores
and to relocate or remodel about 500 stores. Further, the company
expects to finish approximately 400 limited scope remodels during
Dollar General reiterates fiscal 2014 earnings between $3.45 and
$3.55 per share. The current Zacks Consensus Estimate of $3.52
dovetails with the company's guidance range.
For fiscal 2014, total sales are expected to rise by 8% to 9%
year over year, while comparable-store sales are expected to
increase by 3% to 4%.
Currently, Dollar General carries a Zacks Rank #4 (Sell). Other
better ranked stocks worth considering in the retail sector include
Columbia Sportswear Company
), all holding a Zacks Rank #2 (Buy).
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