Dollar General Earnings Fall Short Of Projections

Dollar General posted 2020 fourth-quarter earnings that missed expectations and issued a downbeat earnings forecast for 2021, the discount retailer said in a press release on Thursday (March 18).

Net income was $642.7 million, up 20.0 percent compared to $535.4 million in the fourth quarter of 2019. Diluted earnings per share (EPS) increased 24.8 percent to $2.62 for the fourth quarter of 2020 compared to diluted EPS of $2.10 in the fourth quarter of 2019. Analysts had forecast an EPS of $2.72, up about 30 percent year over year, on sales of $8.33 billion, for an increase of 16 percent, according to WallSt24/7.

For the full fiscal year, net sales increased 21.6 percent to $33.7 billion compared to $27.8 billion in fiscal year 2019. Analysts had estimated EPS of $10.37 on $33.63 billion in revenue.

Todd Vasos, chief executive officer of Dollar General, said he’s happy with the company’s 2020 finish and appreciative of the efforts brought forth by his team during unprecedented times. “Despite a challenging operating environment, our team members have remained steadfast in their dedication to fulfilling our mission of serving others, resulting in exceptional fourth-quarter and full-year financial results,”  Vasos said.

For the fiscal year ending Jan. 28, 2022, Dollar General is anticipating that net sales will be flat or drop as much as 2 percent. Same-store sales are also anticipated to decline 4 to 6 percent. The company predicted that fiscal year 2021 will see the execution of 2,900 real estate projects, including 1,050 new store openings, 1,750 remodels and 100 retail relocations.

“We believe the fundamentals of the business are strong, and we are confident in the team’s ability to execute on our robust plans for 2021,” said John Garratt, Dollar General’s chief financial officer. “While we remain cautious in our 2021 sales outlook given the significant uncertainty that still exists, our guidance reflects low-double-digit same-store sales growth on a two-year stack basis, which we believe speaks to the underlying strength of the business. In addition, our diluted EPS guidance reflects a compound annual growth rate over a two-year period that is well above our long-term goal of delivering at least 10 percent annual EPS growth on an adjusted basis.”

Dollar General’s “popshelf” retail store concept was launched in October 2020 as part of the company’s strategy to expand non-consumables. For the first quarter of last year, same-store sales were up almost 22 percent compared to the same period last year.