Dollar General Reports Q3 Fiscal 2024 Results with Decreased Net Income and Increased Sales

Dollar General Corporation reported its financial results for the third quarter of fiscal 2024, revealing a net income of $196.5 million, or $0.89 per diluted share, compared to $276.2 million, or $1.26 per diluted share, in the same period last year. The company's net sales increased by 5.0% to $10.18 billion, driven primarily by new store openings and a 1.3% increase in same-store sales. However, the operating profit decreased by 25.3% to $323.8 million, reflecting increased markdowns and damages, as well as a higher proportion of sales from the lower-margin consumables category.

In terms of year-to-date performance, Dollar General's net sales for the first 39 weeks of fiscal 2024 reached $30.31 billion, up from $28.83 billion in the prior year. The gross profit margin decreased to 29.7% from 30.6%, attributed to increased markdowns and inventory damages. Selling, general, and administrative expenses also rose as a percentage of net sales, reaching 25.0% compared to 24.1% in the previous year, largely due to higher retail labor costs and hurricane-related expenses.

The company continues to expand its footprint, operating 20,523 stores across 48 U.S. states and Mexico as of November 1, 2024. In the third quarter alone, Dollar General opened 207 new stores, remodeled 434, and relocated 27. The company plans to open approximately 730 new stores in fiscal 2024, including locations in Mexico, and remodel about 1,620 stores. The strategic focus remains on enhancing store formats and optimizing the product assortment to drive sales growth.

Dollar General's inventory management remains a critical focus, with total merchandise inventories increasing by 2% compared to the previous year. The company reported an inventory turnover rate of 4.0 times on a rolling four-quarter basis. Despite the challenges posed by inflation and increased operational costs, Dollar General generated $2.195 billion in cash from operating activities, a 52.2% increase from the prior year, indicating strong cash flow management.

Looking ahead, Dollar General anticipates continued pressure on margins due to inflationary pressures and increased labor costs. The company is committed to maintaining its dividend payments, having declared a quarterly cash dividend of $0.59 per share. However, it has suspended share repurchases for the remainder of fiscal 2024 to preserve its investment-grade credit rating and maintain financial flexibility. The company remains focused on its long-term growth strategies while navigating the current economic landscape.