Dollar General expressed some disappointment with its fourth-quarter sales, although revenues were up year over year and just short of a Wall Street estimate while earnings gained and matched analyst expectations.
The company posted net income of $659.1 million, or $2.96 per diluted share, versus $597.4 million, or $2.57 per diluted share, in the 2021 quarter.
A Yahoo Finance-published analyst consensus estimate called for earnings per diluted share of $2.96 and revenues of $10.24 billion.
Comparable sales in the quarter advanced 5.7% year over year, driven by an increase in average transaction amount partially offset by a modest decrease in customer traffic, the company stated. Comps included growth consumables, partially offset by declines in the apparel, home and seasonal products.
Net sales were $10.2 billion versus $8.65 billion in the year-earlier quarter. Net sales for an additional week in fiscal 2022 were $678.1 million. The net sales increase was primarily driven by positive sales contributions from new stores and the comp gain, partially offset by the impact of store closures. Operating profit was $933.2 million versus $796.7 million in the year-prior period.
For the full fiscal year, the company reported net income of $2.42 billion, or $10.68 per diluted share, versus $2.4 billion, $10.17 per diluted share, in 2021.
Comps advanced 4.3% year over year, driven by an increase in average transaction amount, partially offset by a slight decline in customer traffic and declines in the apparel, home and seasonal products categories, Dollar General maintained.
Net sales were $37.84 billion versus $34.22 billion the year earlier. The net sales increase was primarily driven by positive new stores sales contributions and the comp growth, partially offset by store closure impact. Operating profit was $3.33 billion versus $3.22 billion in the year prior.
Inventories gained in part because of an initiative related to home goods. According to Dollar General, as of February 3, total merchandise inventories, at cost, were $6.8 billion compared to $5.6 billion as of January 28, 2022, up 14.3% on a per-store basis. The increase primarily reflects the impact of product cost inflation and a greater mix of higher-value products, particularly in the Home and Seasonal categories, which reflects the rollout of the company’s non-consumables initiative, as well as the earlier receipt of seasonal goods.
“Our fourth-quarter sales results were strong, although below our expectations, and we are pleased with continued market share gains in both consumables and non-consumables, as well as continued growth with new and existing customers,” said Jeff Owen, Dollar General CEO. “We made significant progress advancing our operating priorities and strategic initiatives in fiscal 2022, including executing nearly 3,000 real estate projects, completing the rollout of our non-consumables initiative, nearly tripling our Popshelf store count, more-than-doubling the size of our private tractor fleet and opening three new distribution centers. As a result, we believe we are well-positioned to continue serving our customers with our unique combination of value and convenience in the communities we call home.”
Owen continued: “Looking ahead, we are excited about our plans for fiscal 2023, which include continued investment in our strategic initiatives and an incremental investment of approximately $100 million in our stores, primarily in incremental labor hours, as we look to build on our sales momentum and capture additional market share by further enhancing store standards and the in-store experience. Building on the investments we made in 2022, and the substantial progress we have made in our supply chain, we believe this incremental investment will yield strong returns as we continue creating long-term sustainable growth and value for our shareholders.”