Dollar General Corporation has reported financial results for its fiscal year 2020 second quarter (13 weeks) ended July 31, 2020.
The company has four stores in Columbia County.
Among the financial highlights:
Net sales increased 24.4%; same-store sales increased 18.8 percent
-- Operating profit Increased 80.5% to $1.0 billion
-- Diluted earnings per share (“EPS”) Increased 89.1% to $3.12
-- Cash flows from operations Increased 157.2% to $2.9 billion $691 million returned to shareholders through share repurchases and cash dividend
-- Board of Directors declares third quarter 2020 cash dividend of $0.36 per share; increases share repurchase program authorization by $2.0 billion
“I want to thank our associates for their exceptional work over the past several months as we continue to navigate this challenging and dynamic operating environment,” said Todd Vasos, Dollar General’s chief executive officer. “As the neighborhood general store for thousands of communities across the country, we appreciate the importance of our role in providing customers with affordable, convenient, and close-to-home access to everyday essentials. As a result of the team’s strong execution and tireless commitment to serving our customers, we are pleased to report strong second-quarter financial results.”
“We continue to operate from a position of strength and are excited to announce the acceleration of several key strategic initiatives, including the rollout of DG Pickup, DG Fresh, and our Non-Consumables initiative, as well as an increase in our expected number of real estate projects for fiscal 2020. Our robust portfolio of initiatives, coupled with our expansive real estate footprint of nearly 17,000 store locations, positions us well to continue delivering value and convenience for our customers, while driving sustainable long-term growth and value for our shareholders.”
Net sales increased 24.4 percent to $8.7 billion in the second quarter of 2020 compared to $7 billion in the second quarter of 2019. The net sales increase included positive sales contributions from new stores and growth in same-store sales, modestly offset by the impact of store closures. Same-store sales increased 18.8 percent compared to the second quarter of 2019, driven by an increase in average transaction amount, partially offset by a decline in customer traffic. Same-store sales increased in each of the consumables, seasonal, home products and apparel categories, with the largest percentage increase in the home products category. The company believes consumer behavior driven by COVID-19 had a significant positive effect on net sales and same-store sales.
Gross profit as a percentage of net sales was 32.5 percent in the second quarter of 2020 compared to 30.8% in the second quarter of 2019, an increase of 167 basis points. This gross profit rate increase was attributable to higher initial markups on inventory purchases, a greater proportion of sales coming from the non-consumables product categories, which generally have a higher gross profit rate than the consumables product category, and a reduction in markdowns as a percentage of net sales.
These factors were partially offset by increased distribution and transportation costs, which were impacted by the COVID-19 pandemic in the form of increased volume and discretionary employee bonus expense. As a result of the significant increase in sales, the company believes consumer behavior driven by COVID-19 also had a significant positive effect on gross profit dollars.
The company realized a significant sales benefit in the 26-week period ended July 31, 2020, as a result of COVID-19. In addition, since the end of the second quarter, the company has continued to experience elevated demand in its stores. As a result, from August 1, 2020 through August 25, 2020, same-store sales increased approximately 15 percent as compared to the comparable timeframe in the 2019 fiscal year.
Due to the significant uncertainty that continues to exist around the severity and duration of the COVID-19 pandemic, including its impact on the U.S. economy, consumer behavior and the company’s business, there is a lack of visibility for the remainder of 2020 with many unknowns. Because it is difficult to predict specific outcomes, the company is not issuing updated fiscal 2020 sales or EPS guidance at this time.