Dollar General records $97M profit

By Don Hogsett -- Home Textiles Today, 3/25/2002 12:00:00 AM

GOODLETTSVILLE, TN — Buoyed by strong fourth-quarter sales and sharply stronger margins, value retailer Dollar General Corp. recorded a strong fourth-quarter profit of $97.4 million, recovering from a year-ago loss of $32.2 million, when the company had to pony up $162 million in cash to settle litigation arising from accounting problems.

The retailer was hammered by litigation a year ago when it was forced to restate results for a three-year period from 1998 to 2000, shredding earnings in the process. But all that seems far behind it now, and Wall Street seems persuaded that the retailer is on the road to recovery. Heartened investors pushed the retailer's stock sharply higher on the solid fourth-quarter sales and profits. Shares of Dollar General climbed almost 10 percent when the earnings news came out, rising by $1.48 a share to $16.85.

Unencumbered by the calendar problems that stunted growth at rival Family Dollar, Dollar General results included sales for the entire holiday period, including post-Thanksgiving sales.

Sales in the all-important Christmas quarter rose by 10.0 percent, to $1.6 billion from $1.4 billion last year. Same-store sales increased by 6.5 percent. Driving much of that top-line growth, Dollar General opened 79 new stores, closing 24 others, for a net gain of 55 units.

In a big lift to the bottom line, average gross margin widened sharply, climbing by 370 basis points, to 30.0 percent from 26.3 percent a year ago. But skewing the year-over-year comparison somewhat, last year's gross margin rate was hurt by a $21.5 million markdown.

Dollar General Corp.