Dollar General Corporation (DG, Financial) has been delivering value to shoppers for over 75 years. It helps shoppers save time and money by offering products that are frequently used and replenished, such as food, snacks, health and beauty aids, cleaning supplies, clothing for the family, house wares and seasonal items at low prices in convenient neighbourhood locations. Dollar General operates 12,483 stores in 43 states as of Jan. 29.
The company recently reported strong fourth quarter results. It achieved strong financial results and is focusing on profitability. It boasts of positive same-store sales growth, effectively balanced sales and operating profit.
Fourth quarter results
The company's net income for the 2015 fourth quarter was $376 million, or diluted EPS of $1.30, which was $355 million during the prior year quarter.
Net sales increased 7% and was $5.29 billion in the fourth quarter. Departments with the most significant increases in net sales were candy and snacks, perishables, tobacco and food. Same-store sales increased 2.2%, resulting from increases in both customer traffic and average transaction amount.
The company's gross profit as a percentage of sales was 31.8%, which marked an increase of 12 basis points from the prior year quarter.
Selling, general and administrative expenses were $1.07 billion in the 2015 fourth quarter. For both the 2015 and 2014 quarters, SG&A as a percentage of sales was 20.2%.
Full year 2015 results
Full year 2015 net sales increased by 7.7% year over year and was $20.4 billion. The company's gross profit rate was 31% of sales in 2015.
The company reported net income of $1.17 billion, or diluted EPS of $3.95, for fiscal year 2015.
During the year, the company opened 730 new stores and remodelled or relocated 881 stores.
Share repurchases
The company repurchased $1.3 billion, or 17.6 million shares, under its share repurchase program in 2015, at an average price of $74.03 per share. Since December 2011, the company has repurchased 62 million shares of its common stock under the share repurchase program at a total cost of $3.6 billion, at an average price of $57.67 per share. The total remaining authorization for future repurchases is approximately $920 million.Â
Dividend
On March 8, the board of directors approved an increase of 14% in its regular quarterly cash dividend to shareholders. The first quarter dividend of 25 cents per share will be payable on April 12 to shareholders of record on March 29.Â
Annual expectations
The company expects the following:
- Net sales to be in the range of 7% to 10%.
- Operating profit to be in the range of 7% to 11%.
- Capex to be in the range of 2% to 3% of sales.
- Capex for 2016 to range between $550 million to $600 million.
Focus at the moment
- Increasing long-term shareholder value.
- Driving profitable sales growth.
- Capturing growth opportunities.
- Enhancing its position as a low-cost operator.
- Strategic steps to ensure sustainable growth.
On a concluding note
Dollar General definitely has more room for growth. For the last three years, the company delivered consistent financial results. For 2016, the company plans to return approximately $1.3 billion to shareholders through anticipated quarterly cash dividends and consistent share repurchases. I would recommend a buy for this company.
Disclosure: I do not hold any position in the company.
