Dollar General profit up 11% in 4Q

By Don Hogsett -- Home Textiles Today, 3/24/2003 12:00:00 AM

GOODLETTSVILLE, TN —

Buoyed by new store openings and a double-digit increase in sales, fourth-quarter profits at Dollar General Stores Inc. climbed higher by 10.9 percent, to $108.1 million from $97.4 million last year.

Sales at the neighborhood discount retailer advanced by 10.9 percent, to $1.8 billion from $1.6 billion the prior year. Same-store sales moved up by 2.1 percent.

"We ended the year with impressive cash flow, 622 new stores, a strong balance sheet and a significant list of operational achievements," said ceo Don Shaffer. Wall Street clearly agreed, and one brokerage house, Wachovia Securities, Charlotte, NC, upgraded the retailer's stock to 'outperform' from a previous rating of 'market perform.'

Average gross margin during the Christmas quarter held steady at 30.0 percent. Gross margin dollars, boosted by the rising sales, climbed to $528.0 million from $475.5 million. Operating costs climbed slightly higher, when measured as a percentage of sales, to 19.9 percent form 19.7 percent a year ago.

For all of last year, profits shot up by 27.7 percent, getting a lift from the $30.0 million proceeds form a lawsuit. Sales rose by 14.6 percent, to $6.1 million from $5.3 million.

Critical to its success last year, the retailer said, was a fistful of key accomplishments. It implemented item-level inventories in all of its stories, exercising tighter control of inventories. The perishable foods cooler program was expanded to 1,367 stores by year end, up from 411. Automatic replenishment of core merchandise was introduced into 175 stores to improve operational efficiencies and increase in-stock levels. Improvements in the order cycle cut the time between store order and receipt of merchandise by 24 to 48 hours.

Dollar General Corp.