Dollar General profits on the rise
By Don Hogsett -- Home Textiles Today, 12/15/2003 12:00:00 AM
GOODLETTSVILLE, TN —
Fueled by stronger sales, substantially wider margins and deep cuts in interest expense, third-quarter profits at Dollar General Corp. climbed by 13.6 percent, to $77.9 million from $68.6 million last year.
Sales at the nationwide chain of neighborhood stores advanced by 12.5 percent, to $1.7 billion from $1.5 billion last year, driven by continued rapid expansion. Same-store sales rose at a more moderate pace of 3.8 percent.
Providing a big lift to the bottom line, average gross margin improved considerably, widening by 210 basis points, or 2.1 percentage points, to 30.7 percent of sales from 28.6 percent a year ago. Gross margin dollars shot up by 20.6 percent, to $516.9 million from $428.6 million.
Driving the margin improvement were a number of factors, the company said, including higher average mark-up on inventories; lower distribution and transportation costs as a percentage of sales; a decrease in the provision for inventory shrinkage; and strong sales of high-margin seasonal merchandise.
Somewhat offsetting the stronger margins, costs rose during the period, rising by 50 basis points, or one half of a percentage point, to 22.9 percent of sales from 22.4 percent a year ago. Higher costs were blamed on increases in workers' compensation and general liability costs, store training expenses, and the accrual for bonuses.
The retailer slashed its interest expense by 30.9 percent, to $8.0 million from $11.5 million last year, generating a cash savings of $3.6 million.
Dollar General Corp.
|Qtr. 10/31 (x000)||2003||2002||% chg|
|a-Results in the prior-year third quarter include $25.0 million in insurance proceeds; and results in the year-ago nine-month period include $29.5 million in insurance proceeds.
|Oper. income (EBIT)||131,346||93,431||40.6|
|Per share (diluted)||0.23||0.20||15.0|
|Average gross margin||30.7%||28.6%||—|
|Nine months||2003||2002||% chg|
|Oper. income (EBIT)||336,140||250,179||34.4|
|Per share (diluted)||0.59||0.47||25.5|
|Average gross margin||29.4%||27.6%||—|
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