Dollar General up 19 percent

By Staff -- Home Textiles Today, 8/30/2004 12:00:00 AM

GOODLETTSVILLE, TENN. —

Helped by growing same-store sales, along with deep cuts in interest expense and widening margins, second quarter profits at Dollar General Corp. climbed 19 percent, to $71.3 million from $59.9 million a year ago.

Sales at the low-price neighborhood retailer improved 11.2 percent, to $1.8 billion from $1.7 billion, largely on the strength of new store openings. Same-store sales increased 3.2 percent.

Providing a lift to the bottom line, the retailer slashed interest expense virtually in half, 48.8 percent, to $4 million from $7.9 million the preceding year, generating a cash savings of $3.9 million.

But acting as a drag, costs climbed during the period 90 basis points, or nine-tenths of a percentage point, to 23.4 percent from 22.5 percent last year.

With higher costs offsetting wider margins and stronger sales, operating profit rose 6.2 percent, to $108.1 million from $101.8 million a year ago.

In a major lift to the bottom line, the company's income tax rate was reduced to 31.5 percent from 36.2 percent in the same period a year ago. This year's tax provision reflects an adjustment of $6.2 million to reduce state tax liabilities, and another $2 million in reduced interest accrual.

Home products lagged far behind other product categories during the quarter, posting a mangy 0.2 percent increase, to $208.2 million from $207.7 million. In sharp contrast, highly consumable items jumped 13.6 percent, to $1.2 billion from $1 billion, making it the engine that drives the retailer's sales.

Dollar General Corp.